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2022 PFA & RSA Pension funds audited annual accounts: NLPC PFA
04 June 2023
2023 PFA Corporate and Pension Fund Accounts for the year ended December 2022 – NLPC Pension Fund Administrators Limited
Analysis:
NLPC Pension Fund Administrators Limited, known as NLPC PFA was incorporated on 19 January 2005 and is duly licensed by the National Pension Commission (PenCom), to carry on business as a Pension Fund Administrator (PFA) as defined under the Pension Reform Act, 2014.
For the financial year ended 31 December 2022, the PFA closed the year with 350,884 RSA holders, up from 338,716 RSA holders in 2021. Additionally, assets under management for the 7 Retirement Savings Accounts (RSAs) funds available to the public grew to N332.20 billion, up from N317.85 billion (+4.51%) the previous year.
Performance Analysis: Company
Turning our attention to the financial performance, NLPC PFA demonstrated some improved metrics. Total income for the year ending 31st December 2022 rose 15.30% to N4.14 billion reversing the decline of 2021 when total income had fallen 8.77% to N3.59 billion from N3.93 billion in 2020. Cost to income ratio declined to 74.37% from 88.30% in 2021, though it was 66.83% in 2020 but 85.42% in 2019. Over the last five years, this ratio has averaged 78.85%, one of the highest in the industry.
The company's Profit After Tax (PAT) more than doubled, surging by 171.83% to almost N900 million, compared to N327.40 million in 2021. Return on equity (ROE) fell to 15.60% from the previous year's 16.58% another annual decline from 2020 when ROE was 30.26%. Shareholders' funds for 2022 was up by 188.86% to N5.71 billion from N1.96 billion in 2021, a result of the regulatory induced recapitalisation across the pension industry.
Overall NLPC PFA is yet to find some consistency in profitability, which seems to be spilling over into managing clients pension funds as shown in the fund analysis below.
Performance Analysis: RSA Funds (audited)
For the year 2022 the NLPC PFA RSA Fund I appreciated in value by 8.36%, Fund II by 7.55%, Fund III 8.45%, Fund IV 8.01%, Fund VI – Non-Interest (Active) 18.73%. No audited accounts have been published for fund V.
Returns benchmarks are yet to be established for pension funds but for indirect comparisons it is worth noting that for the year 2022 the stock market appreciated by 19.98%, inflation was 21.47% and MPR closed the year at 16.50%, having risen steadily through the year.
For the year to December 2022, the NLPC PFA Fund I RSA members experienced a reappearance of positive investment returns. The fund appreciated 8.36% after suffering a decline of 9.06% in 2021. This was also on the back of positive income generation of N9.97 million compared to negative income of N2.18 million in 2021. Net gains from investing activities were therefore positive with net gains from investing activities coming in for the year at N7.75 million. Additionally, the fund's expense ratio, which measures the annual cost of managing the fund, was 2.12%. Over the last five years, the average expense ratio stood at 2.99%. The fund ranked 19th out of 19 in terms of performance in 2021. The ranking for 2022 will be revealed in our 2023 report later in the year.
Income earned in the NLPC PFA Fund II was 67.35% higher than 2021, rising to N12.24 billion from N7.31 billion in 2021, with net gains from investing activities coming in at N9.84 billion. The fund suffered a loss from investing activities in 2021. This loss led to the fund depreciating in value in 2021 by 3.22%. In comparison there was a turnaround as the fund appreciated by 7.55% in 2022. The funds expense ratio was to 1.80% in 2022. Over the last 5 years the ratio has averaged 3.42%, mostly because of the high ratio in 2021 which came in at 8.78%. In 2021 the fund ranked 19 out of 19 in terms of performance. The ranking for 2022 will be revealed in our 2023 report later in the year.
Income earned in the NLPC PFA Fund III was 59.15% higher than 2021, coming in at N13.32 billion, rising from N8.37 billion. The fund barely broke-even in 2021 on the income generated but posted net gains from investing activities of N11.13 billion in 2022. As a result, the funds expense ratio was lower at 1.57% compared to 5.75% the year before. The fund appreciated by 8.45% in 2022 compared to 0.57% appreciation 2021. In 2021 the fund ranked 19 out of 19 in terms of performance. The ranking for 2022 will be revealed in our 2023 report later in the year.
The NLPC PFA Fund IV appreciated by 8.01% in 2022 compared to 4.32% in 2021. Net income rose by 37.33% to N4.73 billion from N3.45 billion in 2021, with net gains from investing activities rising to N4.33 billion from N2.26 billion in 2021. The expense ratio was 0.69%, falling from a high if 2.21% in 2021. In 2021 the fund ranked 16 out of 19 in terms of performance. The ranking for 2022 will be revealed in our 2023 report later in the year.
According to data collated using PenCom periodic reports, NLPC PFA had 2,103 RSA holders who’s pension funds were invested in its Fund V. The company publishes fund prices daily, but no audited accounts have been published as at the time of concluding this report.
NLPC PFA Fund VI – Non-Interest (Active)
This is the first full accounting year and first set of audited accounts for the NLPC PFA Fund VI – Non-Interest (Active). The fund grew closing net assets to N310.72 million from N65.33 million the year before. Income earned in the fund was N26.63 million, compared to N177,714 in 2021. Net gains from investing activities were N22.91 million compared to N124,508 in 2021. The funds expense ratio was 1.20% and the fund appreciated by 18.73% for the year, 2021 was a partial year.
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