The Director-General of the National Pension Commission (PenCom), Aisha Umar-Dahir, says pension administrators faced a considerably challenging 2019 due to the negative performance of the NSE All-Share Index which made it difficult for PFAs to find eligible stocks to invest in.
According to her, the operating environment for Pension Funds Administrators (PFAs) was made difficult in 2019 due to the absence of viable investment opportunities.
“This has affected the universe of eligible securities and marked a major shift away from the Capital Market due to the significant decline of the All Share Index. This challenge has encouraged the Commission to intensify its efforts at encouraging eligible alternative investments by the PFAs.”
“Pension assets had grown by an average of N117 billion on a monthly basis between January and October 2019. This was possible despite the economic conditions in the country. The actual size of the assets was N8.64 trillion as at 31 December 2018, which grew to N9.81 trillion as at 31 October 2019. This shows that the assets had grown by N1.27 trillion in 10 months. Indeed, the growth was achieved due to heavy exposures of the PFAs in FGN securities and the relatively very high yields during the year, while investments in equities came down to just below 5 per cent in October due to the prevailing performance of the stock market indices.”
The PenCom said that registration for the Retirement Savings Account has continued to increase by an average of 40,000 new registrations every month. As of October, ending, about 8.8 million people have registered. And even though this is a far cry from the 20 million target that was set for 2019, Dahir noted that it is still something.
Despite the efforts being made by PenCom to position Nigerian pension assets for success, there is still a major problem posed by rising inflation.
Recall that the persistent depreciation in the value of the Naira has eroded the value of Nigeria’s pension assets by as much as 100% between 2012 and 2019.
Unfortunately, high inflation rate continues to be a major problem for the Nigerian economy in the meantime.
The latest inflation report by the National Bureau of Statistics showed that the country’s inflation rose to 11.85% in November.