Pension Net Asset Value Hits N20.48trn In June 2024
Ms. Omolola Oloworaran, Acting Director-General, PenCom
The pension Net Asset Value (NAV) has continued upward trajectory hitting N20.48 trillion at the end of second quarter 2024 (June 30), up from N19.67 trillion recorded as at 31 March, 2024.
According to the quarterly report published by the National Pension Commission (PenCom), Net Asset Value (NAV) of Pension Fund Assets as at 30 June 2024 was N20.48 trillion, which comprised of N14.18 trillion, RSA ‘Active’ Funds (i.e. RSA Funds I, II, III, V and VI active); N1.48 trillion, RSA Retiree Fund IV; N2.53 trillion, CPFAs; and N2.29 trillion, Approved Existing Schemes.
Pension Fund Assets were mainly invested in Federal Government Securities (FGN), which accounted for 63.27% of total assets. The composition of investments in FGN Securities were as follows: FGN Bonds, 96.43%; Treasury Bills, 1.95%; and Agency, Sukuk and Green Bonds, 1.62%.
The industry NAV as at the end of the reporting period increased by 4.14% (N814.92 billion) to N20.48 trillion compared to a NAV of N19.67 trillion as at 31 March, 2024. The growth in Q2:2024 was lower compared to the growth of N1.31 trillion (7.16%) recorded in Q1:2024. The diminution was mainly due to investment returns, particularly depreciation in the prices of equities during the period.
The value of investments in domestic quoted ordinary shares stood at N1.97 trillion (9.60% of total assets under management) indicating a net decrease of N114.63 billion (5.51%) compared to N2.08 trillion as at 31 March, 2024.
The decrease in the value of investments in domestic quoted equities was primarily due to the depreciation in the prices of some stocks during the reporting period, as the Nigerian Stock Exchange Pension Index (NSE-PI) depreciated by 2.26% in Q2:2024 relative to a significant appreciation of 38.50% in Q1:2024.
The value of investments in FGN Securities increased by N759.13 billion (6.22%) to N12.96 trillion as at 30 June 2024 from N12.20 trillion as at 31 March 2024. The increase in the value of investments in FGN Securities was majorly due to additional investments, in the asset class during the quarter.
The NAV of the RSA ‘Active’ Funds, which includes RSA ‘Active’ Funds I, II, III, Fund V as well as Fund VI Active was N14.17 trillion as at 30 June 2024. This represented a net growth of N452.87 billion (3.30%) as the NAV increased from N13.71 trillion as at 31 March, 2024 to N14.17 trillion as at 30 June, 2024. These figures were exclusive of the balances of N29.03 billion and N17.46 billion in respect of the Contributions of FGN workers domiciled with the CBN and awaiting transfers to PFAs as at 31 March and 30 June, 2024 respectively.
The RSA Fund II, which is the default RSA Fund under the Multi-Fund Structure, maintained the largest share of the total assets of the Active RSA Funds as it represented 59.98% of the total assets of the RSA ‘Active’ Funds as at the end of the reporting period.
Contributions Received:
Monthly pension contributions totaling N707.82 billion were received in Q2:2024 for RSA Funds I, II, III, V and VI Active. The amount had increased by N131.12 billion (22.74%) compared to the total contributions of N576.70 recorded in Q1:2024.
Interest/Coupons and Dividends:
The interest/coupons received on investments in fixed income securities amounted to N414.97 billion in Q2:2024. The amount indicated an increase of 11.32% compared to the sum of N372.77 billion recorded in Q1:2024.
Furthermore, dividends of N64.53 billion received by RSA Active funds represented a N58.24 billion increase relative to dividends of N6.29 billion received in Q1:2024.
Net Un-realized Gains/(losses) on Equities/Equity Funds and Bonds:
Total unrealized gains on the RSA ‘Active’ Funds in Q2:2024 amounted to N84.08 billion compared to unrealized gains of N397.83 billion Q1:2024. The unrealized losses relative to Q1:2024 was attributed to a depreciation in the prices of equities during the period as the Pension Equity Index appreciated by 2.26% in Q2:2024 relative to an appreciation of 38.50% in Q1:2024.
Net realized Gains/(losses) on Bonds:
Total realized gains for the period decreased by N4.78 billion from N5.15 billion in Q1:2024 to N0.38 billion in Q2:2024.
Transfers to RSA Retiree Funds and Benefits Payments:
Total transfers from RSA ‘Active’ Funds to RSA Retiree Fund and payment of 25% unemployment benefits amounted to N582.65 billion in Q2:2024, which was 16.73% higher from N499.13 billion transferred in Q1:2024.
Portfolio Performance of the RSA Active Fund
The average annualized rate of return for RSA Funds I, II, III, V and VI Active were 7.8%, 5.87%, 10.91%, 17.15% and 14.89% respectively. The performances of the Funds reflected the asset allocation and security selection of the various funds under management.
The relatively higher performances of the RSA Funds for I, II & VI Active in Q2 2024 were due to the depreciation in the prices of equities during the review period. Funds I and II recorded the highest unrealized losses due to higher exposure to variable income securities. Additionally, the performance of Fund V increased on the back of a higher yields on fixed income securities during the quarter.
RSA Retiree Fund IV and “Fund VI – Retiree
The NAV of RSA ‘Retiree’ Funds increased by N42.19 billion from N1.44 trillion as at 31 March, 2024 to N1.48 trillion as at 30 June, 2024.
Transfers from RSA Active Funds:
Transfers into the RSA Retiree Funds decreased during the period by N17.89 billion (11.54%) to N137.13 billion in Q2:2024 relative to N155.02 billion received in Q1:2023. The noted decrease in transfers to Retiree Funds was due to lower transfers from the RSA funds in respect of retirees during the quarter.
Income (Interests/Coupons):
The interest/coupons received on investments in fixed income instruments in Q2:2024 increased by N5 billion (11.40%). The increase was attributed to a higher yield on additional investments in this asset class during the period.
Net Realized Gains/(Losses) on Bonds and Equities and Net Unrealized Gains/(Losses) on Bonds and Equities:
The Net Unrealized losses on bonds and equities amounted to N1.42 billion for Q2:2024. This was due to net depreciation in the prices of securities in the Fund’s portfolio. Additionally, the Fund realized losses amounting to N1.38 billion from the disposal of securities during the period.
Retirement Benefits Paid:
Retirement Benefits paid in Q2:2024 increased by 0.50% to N137.16 billion relative to N136.48 billion in Q1:2024.
Portfolio Performance – RSA Retiree Fund IV
The average rate of return of 12.23% was recorded on the RSA Fund IV (‘Retiree’ Fund) in Q2:2024. This indicated an increase of 1.62% relative to the 13.85% rate of return in Q2:2023. However, the average rate of return on the RSA VI Retiree Fund increased from 6.47% in Q1:2024 to 15.90% in Q2:2024
