Nigerian Pension Industry’s Assets To Hit N20trn In 2023 – Report
The 2021 insurance industry report by pan-African credit rating agency, Augusto & Co, revealed the growth trajectory of the Nigerian pension industry and the direction it’s headed.
The net assets of the industry, the report revealed, is expected to hit the N20tn mark by 2023, recording an average growth of 18 per cent in the next three years leading to 2023.
The report stated that the growth in the pension industry’s managed assets had been largely driven by investment returns and additional contributions, to a lesser extent.
The rating agency noted that the pension industry’s assets under management stood at N12.3tn as of December 31, 2020, representing a 20.6 per cent growth over the N10.2tn reported at the end of 2019 and an 18.3 per cent compound annual growth rate over the last five years.
However, the Director-General, PenCom has disclosed that the total pension assets under the Contributory Pension Scheme (CPS) have grown to over N13 trillion. This showed a growth of N22 billion between September and October this year.
She disclosed this in her goodwill message at the opening ceremony of the two-day sensitisation workshop on the “Eradication of Pension Fraud in Nigeria” in Abuja recently.
Recall that PenCom in a report of performance of the pension industry released in September, had said the assets rose by N123.47 billion in July 2021 to close at N12.78 trillion compared to the N12.66 trillion rate recorded in the previous month.
The rating agency also added that the industry’s annual contributions, over the last five years, had averaged N699bn while withdrawals had averaged about N341bn, translating to a net annual contribution of N347bn and accounting for 26.6 per cent of the industry’s AuM growth over the period.
It said the remaining 73.4 per cent of average growth was attributable to investment returns earned on the portfolios.
Agusto & Co said, “The pension transfer window opened on November 16, 2020 to allow pension retirement saving account holders to switch Pension Fund Administrators once a year at most and no cost. As of the end of the second quarter of 2021, over 25,600 RSA holders with pension assets over N102.5 billion were reported to have changed PFAs.
“We expect that in the subsequent quarters of 2021, the number of transfers will rise further as more enrollees become aware of the transfer process.”
Competition is expected to intensify in the pension industry as PFAs seek to attract new enrollees while retaining existing ones, according to the rating agency.
