Industry update 

On 18 October 2022, the National Pension Commission (PenCom) released its latest monthly report which contained the unaudited information of how pension fund managers, i.e., PFA’s had invested pension funds up to and including 31 August 2022. The report also included information on the total number of RSA registrations to date as well as total assets under management for fund group. Below is a summary analysis of the information released.

RSA Registrations

New RSA registrations YTD were 228,734 bringing the total number of Retirement Savings Accounts (RSA) since inception of the scheme to 9,757,861. With the data we have, it is currently difficult to say which period records new registrations consistently. Nevertheless, as seen in the tables and charts below, since 2011 RSA registrations have averaged 453,000 new registrations per annum with the highest growth coming in 2018, at 580,698 but have been tailing off since.

Pension Fund Assets Under Management (AUM) as of 31 August 2022

Assets under management for the whole industry grew slightly by 0.46% between July and August from N14.36 trillion to N14.43 trillion. Year to date, AUM has grown by 7.46% from N13.42 trillion to N14.43 trillion, equivalent to $34.7 bn.

Asset Allocation as of 31 August 2022

Pension Funds Industry Portfolio for the period ended 31 August 2022

With assets under management for the industry as a whole at N14.43 trillion as of 31 August, 72.94% (N10.25 trillion) was invested in various fixed income securities, only slightly up from December 2021 (71.74%).

Whilst AUM continues to grow, it is pertinent to note, as analysed pictorially below, that the Pension Fund Administrators (PFA’s) who manage the pension funds under the regulatory supervision of the National Pension Commission have consistently, since inception skewed asset allocation towards fixed income investing. And with interest rates rising, which in turn seems to be pushing fixed income yields higher (though there still seems to be some disconnect between the MPR rate, currently at 15.50% and treasury bill yields, the last stop rate for the 364-Day T-bill was 13.00%), these rises are yet to be reflected in the unit prices of RSA funds as according to the report, FGN and corporate bonds which make up 68.89% of the total assets are held till maturity (HTM) – as yields rise, prices of bonds fall and vice versa. But all this tends to be revealed in the year end audited accounts when accounts are prepared in accordance with International Financial Reporting Standards (IFRS) in addition to PenCom guidelines.

Please note: to make the information easy to read, we have summarised assets into 5 classes – Bonds (all fixed income instruments above 1 year), Equities, Money Market (all fixed income instruments of less than 1 year, excluding cash or cash equivalents), Cash and Others (which includes mutual funds, REITS, Real Estate Properties, Private Equity, and Infrastructure Funds). For the full PenCom report please click here.