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Finance | Pensions n Retirement

PFAs In Need of New Clients; Asset Under Management Increased By 14.9% To N8.64trn In December 2018

Mar 12, 2019   •   by   •   Source: Proshare   •   eye-icon 4495 views

Tuesday, March 12, 2019 09:48 AM / FBNQuest Research

                                                                                     

Theassets under management (AUM) of the regulated pension industry increased by14.9% y/y in December to N8.64trn (US$28.1bn) and by 1.6% m/m. They are growingat a healthy rate yet, at just 6.8% of 2018 GDP, are running well behind manypeer markets. Nigeria was relatively late (2004) with its legislation creatinga sound structure for regulated pensions. The South African industry dates from1996, and its AUM represent more than 70% of comparable GDP. The industry inNigeria has a need of new products.

The industry’s holdings of FGN paper amounted to 73.1% of their AUM inDecember, compared with 70.4% one year earlier. 

The stake of the PFAs in naira debt markets remains pivotal. Theirholdings of FGN bonds at end-December represented 49.2% of the stock of theinstruments at end-September. 

The share of AUM invested in domestic equities has declined over 12months from 8.9% to 7.0%. The NSEASI fell by 17.8% over the same period. Weunderstand that the regulator has lifted the requirement for retirement savingsaccount holders under a set age to hold a minimum exposure to equities, andthereby eased the pressure on the PFAs to invest in an asset class with whichthey are not always comfortable. 

The latest PenCom data show a total of 8.41 million scheme memberships,implying an average portfolio of N1.03m (slightly higher than November). 

 

AUM of PFAs, Dec 2018 (% shares) Total: N8.64trn

Proshare Nigeria Pvt. Ltd.

 

Sources: National Pension Commission (PenCom); FBNQuest Capital Research

 

Thisaverage should decline because from 01 January the PFAs have been able tomarket micro pensions for the self-employed and employees of small firms. Theregulator has suggested an increase in AUM over an unspecified timeframe ofN3trn.

 


Proshare Nigeria Pvt. Ltd.

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