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The value of pension funds in Nigeria rose by 2.23 percent month-on-month, surpassing the N20tn mark to reach N20.23tn in May 2024, according to an unaudited report from the National Pension Commission (PenCom) on the pension funds industry portfolio for the period ending May 31, 2024.
The report highlighted that the Pension Fund Administrators’ (PFAs) investment in federal government securities remained substantial, increasing to 63.22 percent of the total funds. Investment in government securities grew to N12.79tn from N12.40tn in April.
PFAs allocated approximately 10.83 percent of the funds to corporate debt securities, with corporate bonds receiving the largest share.
Experts attribute the PFAs’ preference for government securities and money market instruments to the Central Bank of Nigeria’s hawkish monetary policy, which has raised benchmark interest rates to curb market liquidity. The attractive rates have prompted investors, including pension funds, to channel more capital into fixed-income securities for higher returns.
In the high-interest environment of the money market, pension fund investments dipped marginally to N1.93tn from N1.95tn in the previous month.
However, appetite for mutual funds increased in May compared to April when that segment recorded a decline. In April, mutual funds dropped by 19.93 percent month-on-month to N85.19bn from N106.39bn in March. By May, investment in mutual funds had rebounded to N95.28bn.
At the end of May, pension funds recorded a monthly increase of N440.40bn, marking the second-highest monthly growth this year after a N1.18tn rise in January. Over the first five months of the year, pension funds appreciated by N1.87tn, and on a year-on-year basis, they increased by N4.12tn.
Between May 2023 and May 2024, the number of Retired Savings Accounts (RSAs) grew by 356,795 or 3.57 percent, reaching a total of 10,351,624.
In related news, the National Insurance Commission (NAICOM) has directed African Alliance Insurance Plc to resolve and settle outstanding claims from its customers. This order followed a surge in complaints from annuitants and insurance claimants regarding the company’s delays or inability to meet its obligations.
NAICOM recently summoned the board of African Alliance Insurance to its headquarters in Abuja, demanding the company settle outstanding payments and submit a turnaround plan to address its current challenges. The commission warned that it would take further action if the company fails to meet its deadlines.
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