The Net Asset Value, NAV, of Nigeria’s pension money in the domestic and foreign stock market rose to N1.54 trillion as at the end September 2023, 9M’23, indicating a sharp increase of about 59.6% from the N965 billion recorded in the corresponding period of 2022, 9M’22
Vanguard’s findings from the latest report by National Pension Commission (PenCom) also revealed that the Pension Fund Administrators (PFAs) increased the value of their assets in the domestic bourse by 59.5 % in the 9M’23 period, as a result of the bullish run in the stock market.
The Nigeria Exchange Limited, NGX, All-Share Index, ASI, gained 29.52 in 9M’23 largely driven by institutional local investors.
The growth of the pension industry’s exposure in the stock market was also in tandem with the performance of the NGX Pension Index, as it rallied by 58.9% to close the period at 2,848.38 points.
Analysts have noted that the Nigerian pension industry has been recording significant growth in recent years, following several regulatory reforms by PenCom.
The industry’s total assets increased by 20.3% in the 9M’23 to N17.349 trillion from N14.424 trillion in 9M’22.
Federal government (FGN) securities, which accounted for most of the pension assets, recorded a 23% growth in 9M’23 to stand at N11.309 trillion as against N9.192 trillion in 9M’22 while the corporate debt securities rose by 24.7% to N1.855 trillion from N1.487 trillion in 9M’22.
On the flip side, assets in money market instruments declined by 22% to N1.638 trillion from N2.105 trillion recorded in 9M’22.
Commenting on this development, Analyst and Head of Research and Investment at FSL Securities Limited, Victor Chiazor, said: “The trend in PFA assets in the Nigerian stock market suggests a positive outlook for both pension fund managers and investor, provided economic stability and prudent investment strategies are maintained.”
He added that: “Despite growth, PFAs’ exposure in stocks remains modest. The Pension Industry operates under stringent guideline due to the nature of handling public funds. The PenCOm enforces guidelines and limits to ensure the safety and security of contributors’ funds.
”A critical aspect of this regulation is the restriction placed on PFAs regarding the allocation of contributors’ funds into volatile assets.
”This cautious approach is in line with the need to protect contributors’ savings and ensure that they have a secure and reliable source of income during their retirement years. To achieve this purpose, the PFAs adopt a mix of assets in their investment portfolios.”
