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Nigeria’s pension assets witnessed a significant surge, reaching N16.76 trillion in June 2023, marking a N1.77 trillion (12%) increase compared to the beginning of the year when it stood at N14.99 trillion.
Data compiled by Nairalytics from the National Pensions Commission (PenCom) revealed that the total number of Retirement Savings Account (RSA) registrations rose to 10 million, up from 9.86 million people as of December 2022.
The current value of N16.7 trillion represents approximately 8.4% of Nigeria’s economy, which is valued at N199.3 trillion.
The growth in Nigeria’s pension assets can be attributed to improved regulation and competition in the industry. The increment of the industry’s Minimum Regulatory Capital from N1 billion to N5 billion by the National Pension Commission led to consolidation, acquisitions, and mergers among some Pension Fund Administrators (PFAs).
Furthermore, the introduction of the RSA transfer window, allowing RSA holders to switch PFAs, has increased competition in the industry. As of H1 2023, a total of 59,322 RSA holders switched their PFAs, marking a 180% increase compared to the comparable period in 2022.
The breakdown of pension assets by category shows that RSA Fund II accounted for the majority with a value of N7.15 trillion (42.7% of the total pension fund), followed by RSA Fund III with N4.56 trillion (27.2%). CPFAs accounted for 12% with N2.02 billion, while other funds include Existing schemes (N1.61 trillion), RSA Fund IV (N1.26 trillion), Fund I (N107.4 billion), Fund VI (N39.3 billion), Fund VI retiree (N4.86 billion), and Fund V (N500.6 million).
In June, the Nigerian pension fund asset experienced a remarkable 4.06% growth, reaching N16.76 trillion. The increase was primarily driven by investments in federal government securities, which rose to N10.86 trillion, and a surge in the equities market investments.
Despite the impressive growth of Nigeria’s pension industry, the adoption rate remains low compared to other countries. With only 10 million RSA holders, it represents 5% of the population and 14% of the total labor force. The government must implement policies to further strengthen the pension industry and encourage increased adoption from both the formal and informal sectors.
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