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Retirement Savings Accounts Surpass 10 Million Mark

21 July 2023

Nigeria's Pension Fund Retirement Savings Accounts Surpass 10 Million Mark

In a significant achievement for the Nigerian economy and its citizens' financial security, the country's Pension Fund Retirement Savings Accounts (RSA) have crossed the 10 million mark and assets under management is now ₦16.76 trillion. This milestone is based on the latest available data to 30 June 2023 from the National Pension Commission (PenCom), the industry regulator. It’s taken 3½ years to cross the mark and does mark a momentous step forward in the country's efforts to enhance retirement planning and social welfare for its workforce.

The number though is far from PenCom’s 2020 vision which, in its 2021 Annual report stated its vision is to have 20 million contributors by 2020 (“By 2020, to be a pension industry with 20 million contributors delivering measurable impact on the Economy”, 2021 Annual Report).

Nevertheless, the data reveals a consistent upward trend in the number of Retirement Savings Accounts over the past decade. A closer look at the historical progression of the RSA figures shows:

2023: 10,009,049
2022: 9,862,129
2021: 9,529,127
2020: 9,215,788
2019: 8,891,236
2018: 8,469,257
2017: 7,888,559
2016: 7,412,653
2015: 6,950,503
2014: 6,467,890
2013: 5,988,511
2012: 5,461,299
2011: 4,927,216
2010: 4,542,250

Despite the economic challenges in the country, the consistent growth in the number of Retirement Savings Accounts and growth in assets under management reflects an increasing awareness among Nigerian citizens, as promoted by PenCom, the PFA’s and PenOp about the importance of financial planning for their retirement years.

The Significance of Crossing the 10 million Mark:

Crossing the 10 million RSA mark is not just a numerical milestone; it represents a significant step towards enhancing the social security and financial stability of Nigeria's workforce. With an increasing number of people saving for their retirement, there is a reduced likelihood of older citizens facing financial hardships during their non-earning years.

The presence of a well-managed pension system signals the country's commitment to the long-term welfare of its citizens and its ability to plan for future economic growth.

Challenges Ahead:

While crossing the 10 million RSA mark is a remarkable achievement, there are still challenges that need to be addressed to ensure the sustainability and effectiveness of the pension system. Some of the key challenges include:

Informal Sector Inclusion: A significant portion of Nigeria's workforce operates in the informal sector, where access to formal pension systems is limited. Data available as of 31 March 2023 shows that the scheme has registered less than 100,000 Micro Pension accounts. Extending the pension scheme to cover informal workers remains a challenge but is essential for achieving greater financial inclusivity.
Enhanced Investment Opportunities: As the pension fund grows, there is a need to diversify investment options to maximize returns without compromising safety. Expanding investment opportunities and financial instruments can help achieve this balance.
Return on Investment Performance: The PFAs, on average, have faced challenges in achieving satisfactory portfolio performance. Despite the absence of explicit benchmarks for comparison, there are concerns about underperformance in relation to inflation rates, the Nigerian stock market, and prevailing interest rates. Enhancing investment strategies and exploring opportunities for better returns without compromising the safety of the funds is a crucial challenge to address. Transparent reporting and efforts to improve investment expertise are vital to ensure that retirement savings continue to grow and meet the financial needs of retirees.
Efficient Administration: As the number of Retirement Savings Accounts increases, the administrative challenges faced by PFAs may also grow. It is crucial to continually improve administrative efficiency to ensure seamless management of the pension funds.

Conclusion:

The Nigeria Pension Fund Retirement Savings Accounts crossing the 10 million mark is a momentous achievement for the country. With concerted efforts from all stakeholders, Nigeria can pave the way for a brighter and more prosperous retirement future for us all.

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Our data and information provided is based on public data, our regulatory intelligence effort, from our archives, and other public sources such as from Fund Managers, FMAN, Pension Fund Administrators (PFAs), PenOp, etc. We have taken care to ensure that the information is correct, but MoneyCounsellors neither warrants, represents, nor guarantees the information's contents, nor does it accept responsibility for any errors, inaccuracies, omissions, or inconsistencies contained herein. Because past performance does not predict future performance, it should not be used to make an investment decision. We make no product recommendations. No news or research item should be interpreted as a personal recommendation to buy, sell, or switch any investment. Investments and the income generated by them rise and fall in value, so you may receive more or less than you invested.