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2023 PFA Corporate and Pension Fund Accounts for the year ended December 2022 – Fidelity Pensions

Background.

Fidelity Pensions Managers Limited, generally referred to as Fidelity Pensions was incorporated on September 22, 2004, as Alliance Management Limited. The name of the Company was changed on March 30, 2007, to reflect the nature of its business as a pension fund administrator and is licensed as Pension Fund Administrator (PFA) under the provisions of the Pension Reform Act 2014. The brand name ‘Fidelity’ was chosen at the time to identify with the Fidelity brand, who was a major shareholder. The company’s current shareholders include FSL Securities Limited, Financial Advisory and Investment Consultants Limited, ICMG Securities and the Fidelity Pension Managers Staff Trust amongst others.

As of 31 December 2021, the company had shareholders’ funds of N3.56 billion, as such needed to recapitalise before the deadline of the of the last regulator-induced recapitalisation exercise. As of December 31, 2022, the company had shareholders' funds of N5.64 billion.

Analysis:

Fidelity Pensions ended the 2022 financial year with 323,119 RSA holders in the 6 publicly available RSA funds, an increase of 5,971 RSA holders from 317,148 in 2021. Additionally, assets under management for the 6 audited Retirement Savings Accounts (RSAs) funds published was N127.25 billion, up 25% from N101.80 billion in 2021.

Performance Analysis: Company

Company revenue for the year ended December 31, 2022, was up 25% to N2.1 billion, compared to N1.67 billion in 2021. Total expenses rose by 20% to N1.44 billion, from N1.2 billion in 2021, leading to a cost-to-income ratio of 68.57%, down from 71.62% in 2021, and just slightly below the 5 year average of 68.84%.

Profit After Tax (PAT) for 2022 increased almost 21% to N530.52 million, compared to N439.55 million in 2021 and shareholders' funds grew to N5.64 billion in 2022 from N3.56 billion in 2021. Return on equity was 9.41%.

Performance Highlights: RSA Funds (audited)

For the year ended 31 December 2022, the Fidelity Pensions Fund I appreciated by 8.74%, Fund II appreciated by 9.71%, Fund III by 9.32%, Fund IV by 9.53%, Fund V by 9.47% and Fund VI – Non-Interest (Active) by 7.89%. The company offers 6 of the 7 PenCom approved funds to the public, though it only publishes daily prices for Funds I to V.

The pension industry does not currently benchmark the performance of any fund to any performance index. In the absence of any benchmark index to measure/compare fund performances for the year 2022, and to aid readers indirect comparison, the NGX All-Share Index (a measure of performance of the Nigerian stock market) appreciated by 19.98%, the NGX Pension Index appreciated by 16.96%, inflation was 21.47% and MPR closed the year at 16.50%, having risen steadily through the year. 

Fidelity Pensions Fund I highlights:

·      Fund performance: up 8.74% in 2022, higher than the 4.05% in 2021 but lower than the 9.91% in 2020.

·      Fund income was N19.87 million in 2022, up 123% from N8.90 million in 2021.

·      Net gains from investing activities rose 183% to N15.66 million in 2022, up from N5.53 million in 2021. The fact that gains from investing activities grew faster than net investment income suggests prudent cost/dealing management strategies, which is good for RSA holders.

·      Fund size: the size of the fund, measured by net assets, grew almost 38% to N213.54 million from N155.26 million.

·      Fund expense ratio (cost of managing the fund) was 1.97% in 2022, down from 2.17% in 2021. The lower this ratio, the better for RSA holders.

·      Asset Allocation as of 31-12-2022: DNA.

·      Performance ranking: The fund performance for 2021 was ranked 15 out of 19 in our 2022 report.

Fidelity Pensions Fund II highlights:

·      Fund performance: up 9.71% in 2022, compared to 2.69% in 2021 and 19.26% in 2020.

·      Fund income was up almost 116% to N9.91 billion in 2022. Though this was up on the N4.6 billion in 2021, it was below the N10.4 billion of 2020.

·      Net gains from investing activities was N8.3 billion in 2022, up 153% in 2021 which was N3.28 billion. 2020 was N9.29 billion.

·      Fund size: Fund II grew almost 23% to N98.57 billion from N80.32 billion in 2021. The fund had grown 13.48% in 2021, 25.73% in 2020 and 27.84% in 2019.

·      Fund expense ratio: Cost of managing the fund came in at 1.63% in 2022, a marginal drop on the 2021 figure of 1.64%.

·      Asset Allocation as of 31-12-2022: DNA.

·      Performance ranking: The fund performance for 2021 was ranked 17 out of 19 in our 2022 report.

Fidelity Pensions Fund III highlights:

·      Fund performance: was 9.32% in 2022, compared to 4.12% in 2021 and 24.88% in 2020.

·      Fund income was up 79% to N1.98 billion in 2022. Though this was up on the N1.11 billion of 2021, it was lower than the N2.22 billion of 2020.

·      Net gains from investing activities in 2022 was N1.67 billion, up 95% from N855.41 million in 2021. 2020 was N2.03 billion.

·      Fund size: Fund III grew 55% to N25.13 billion from N16.19 billion in 2021.

·      Fund expense ratio: 1.24% in 2022, down from 1.56% in 2021 and 1.41% in 2020. The fund has a 4 year average of 1.45%. The lower this ratio the better for RSA holders.

·      Asset Allocation as of 31-12-2022: DNA.

·      Performance ranking: The fund performance for 2021 was ranked 18 out of 19 in our 2022 report.

Fidelity Pensions Fund IV highlights:

·      Fund performance: up 9.53% in 2022, compared to 4.33% in 2021 and 20.88% in 2020.

·      Fund income: N560.06 million in 2022, up 22.08% from N458.75 million in 2021. Both down on the N564.13 million in 2020.

·      Net gains from investing activities: N511.72 million in 2022, up 21% from N423.25 million in 2021. 2020 was N520.13 million.

·      Fund size: Fund IV grew almost 23% to N6.26 billion, from N5.09 billion in 2021 and N4.32 billion in 2020.

·      Fund expense ratio was a low 0.77% in 2022, down on the 0.70% of 2021 and the 1.02% of 2020.

·      Asset Allocation as of 31-12-2022: DNA.

·      Performance ranking: The fund performance for 2021 was ranked 17 out of 19 in our 2022 report.

Fidelity Pensions Fund V highlights:

·      Registered Fund V RSA holders: Fidelity Pensions had 6,887 Fund V RSA holders as of 31 December 2022, up from 6,730 in 2021. Total industry Micro Pension RSA holders in 2022 were 89,327, giving Fidelity Pensions a 7.71% market share.

·      Total assets in the fund: N34.02 million in 2022, up almost 10% from N30.99 million in 2021.

·      Fund income: Net fund income for the fund was almost N3 million in 2022, up from N2.45 million in 2021.

·      Net gains from investing activities was N2.65 million in 2022, up from N2.24 million in 2021.

·      Fund performance was 9.47% in 2022 compared to 8.41% in 2021.

·      Performance ranking: The fund performance for 2021 was ranked 5 out of 14 in our 2022 report.