NLPC Pension: 2023 Audited Accounts Summary

NLPC Pension (formerly NLPC PFA) recently published its 2023 audited accounts. Here’s a summary review and key financial highlights, financial ratios, fund performance, and the trend in the number of Retirement Savings Account (RSA) holders.

Financial Highlights

• Total Revenue: Total revenue for rose 8% to ₦4.48 billion in 2023, up from ₦4.14 billion in 2022. Fee income, from the management of pension funds rose 5.6% to ₦3.91 billion from ₦3.71 billion, whilst investment income mainly from the management of shareholders capital and internally generated cashflow rose 32% to ₦568 million from ₦430 million.
• Profit After Tax (PAT): PAT fell 5% to ₦844 million, down on the previous year’s ₦890 million.
• Operating Expenses: Operating expenses rose faster than revenue and PAT by 13% to ₦3.47 billion from ₦3.08 billion, leading to a rise in the company’s cost-to-income ratio, which rose to 77.49% from 74.37%. The company has a high cost to income ratio which has averaged 76% over the last 10 years.
• Shareholder’s Funds: The company’s shareholders funds ended the year at ₦5.88 billion in 2023 up 3% from the ₦5.71 billion in 2022.
• Return on Equity (ROE): ROE was a below inflation 14.34%, a fall from the 15.6% ROE generated in 2022.

Financial and Fund Highlights

Corporate Audited Annual Results

Financial Ratios

Fund Performance Highlights

• RSA Funds Performance: NLPC Pension offers all seven regulated RSA pension funds to the public. Notably, only six of the seven funds put in a better performance than the previous year (see above), whilst only four funds out-performed the industry benchmark returns (see our article on benchmark returns here).

5-Year Audited Pension Funds Performance

Number of RSA Holders

• RSA Growth: The growth in the number of RSA holders was another highlight of the year. NLPC Pension saw an increase of 2.75% in RSA holders, adding 9,657 new accounts to close the year at 360,541 RSA holders, 10^th in the industry with a 3.54% market share.

Demographic Analysis

• Age Distribution: The majority of 330,000 RSA holders (83.9%) registered in 2023 fell within the age bracket of <30 years to 39 years, indicating a young and growing industry subscriber base. Of the 2023 registrations, Fidelity Pension Managers recorded 2.93% of this growth.

Conclusion

NLPC Pension's 2023 audited accounts reveal an uninspired financial performance with some areas of concern. Total revenue increased by 8% to ₦4.48 billion, driven by a rise in fee income from pension fund management and significant growth in investment income. However, Profit After Tax (PAT) declined by 5% to ₦844 million due to a 13% increase in operating expenses, leading to a higher cost-to-income ratio of 77.49%.

The company’s shareholders' funds saw a modest increase of 3%, reaching ₦5.88 billion. Despite this small gain, Return on Equity (ROE) dropped to 14.34%, which was below half the 2023 yearend inflation rate of 28.96%

Fund performance was mixed, with only four of the RSA funds outperforming industry benchmarks. The number of Retirement Savings Account (RSA) holders grew by 2.75%, the company ending the year with 360,541 holders, and positioning NLPC Pension as the 10th largest in the industry with a 3.54% market share.

Watch out for the 2024 Money Counsellors Annual Report on Pensions. MCARP 2023 available here.