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

Background.

Oak Pensions Limited was incorporated on the 30th of March 2006, and licensed by the National Pension Commission (PenCom) as a Pension Fund Administrator (PFA) under the provisions of the Pension Reform Act on the 14th of November 2006. As of 31 December 2021, Oak Pensions had shareholders’ funds of ₦2.24 billion, and had recapitalised by the deadline of the last regulator-induced recapitalisation exercise. As of December 31, 2022, the company had increased its shareholders' funds to close at slightly over ₦5.69 billion.

Analysis:

Oak Pensions ended the 2022 financial year with 229,101 RSA holders, an increase of 9,568 RSA holders from 219,533 in 2021. Additionally, assets under management for the 4 audited Retirement Savings Accounts (RSAs) funds published was ₦144.55 billion, up 16% from ₦124.16 billion in 2021.

Performance Analysis: Company

Company revenue for the year ended December 31, 2022, was up 33% to ₦2.01 billion, compared to ₦1.57 billion in 2021. Total expenses rose 22% to ₦1.41 billion, from ₦1.15 billion in 2021, with the company’s cost-to-income ratio falling to 68% from 74%, the lowest of the last 5 years. The 5-year average is 73%.

Oak Pensions made profit after tax of ₦664.52 million for 2022, up 63% from ₦346.57 million, and shareholders' funds grew to ₦5.69 billion, from ₦2.24 billion in 2021. Return on equity was 9.92% for 2022, down from 15.47% in 2021. In accordance with new guidelines from the regulator, the company had raised capital in 2022 to bring it’s shareholder funds up to the minimum. Return on equity of the average capital for the last two years was 14.24%.

Performance Highlights: Oak RSA Funds (unaudited)

For the last 3 years Oak Pensions has not included NAV per Unit in published summary audited accounts for each respective fund. As such, we are constrained to use each respective funds unaudited NAV per unit as of 31 December each respective year as obtained from the company’s website.

Using the unaudited NAV’s per unit for the year ended 31 December 2022, Oak Pensions Fund I appreciated by 10.84%, Fund II appreciated by 9.86%, Fund III by 9.84%, Fund IV by 11.69%. We do not have complete data for Fund V and Fund VI – Non-Interest (Active).

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. 

Oak Pensions Fund I highlights:

·      Fund performance (unaudited): up 10.84% in 2022, higher than the 4.03% in 2021 but lower than the 37.68% in 2020.

·      Fund income was up 148% to ₦10.07 million in 2022, from ₦4.06 million in 2021 but down from ₦19.06 million in 2020.

·      Net gains from investing activities rose 219% to ₦8.36 million in 2022, up from ₦2.62 million in 2021 but down from ₦17.80 million in 2020.

·      Fund size: the size of the fund, measured by net assets, grew 77% to ₦101.59 million from ₦57.26 million in 2021.

·    Fund expense ratio (cost of managing the fund) was 1.69% in 2022, down from 2.51% in 2021, also down on the 1.91% of 2020, a step in the right direction. The 4 year average is 2.25%.

·      Asset Allocation (31-12-2022): Data Not Available

·      Performance ranking: Due to the lack of audited data the fund was not ranked in our 2022 Annual Report on Pensions.

 Oak Pensions Fund II highlights:

·      Fund performance (unaudited): up 9.86% in 2022, compared to the fund unit price falling 0.34% in 2021. The fund was up 19.37% in 2020. The 5-year average return was 10.68%.

·      Fund income was up almost 422% to ₦6.70 billion in 2022. Though this was up on the ₦1.28 billion in 2021, it was below the ₦10.03 billion in 2020.

·      Net gains from investing activities were ₦5.61 billion in 2022, up 2,453% from ₦219.84 million in 2021 and down from the ₦9.04 billion in 2020.

·      Fund size: Fund II grew 12% to ₦64.39 billion from ₦57.31 billion in 2021 and ₦56.51 billion in 2020.

·      Fund expense ratio: Cost of managing the fund in 2022 was 1.69% in 2022, down on the 1.86% in 2021 and 1.75% in 2020. The 5-year average was 1.99%.

·      Asset Allocation (31-12-2022): Data Not Available.

·      Performance ranking: Due to the lack of audited data the fund was not ranked in our 2022 Annual Report on Pensions.

Oak Pensions Fund III highlights:

·     Fund performance (unaudited): was 9.84% in 2022, compared to a fall in the fund unit price of 2.91% in 2021. The fund was up 22.69% in 2020. The 5-year average return is lower at 9.32%.

·    Fund income was positive ₦6.17 billion in 2022 whilst negative in 2021 and it also made a loss from investment activities of ₦967.54 million in 2021.

·      Fund size: Fund III grew almost 18% to ₦64.30 billion from ₦54.69 billion in 2021 and ₦53.81 billion in 2020.

·    Fund expense ratio was down to 1.56% in 2022, down slightly from 1.59% in 2021 but higher than the 1.44% in 2020. The fund has a 4 year average of 1.54%. The lower this ratio the better for RSA holders as more returns accrue to RSA’s.

·      Asset Allocation (31-12-2022): Data Not Available.

·      Performance ranking: Due to the lack of audited data the fund was not ranked in our 2022 Annual Report on Pensions.