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Total Pension Assets in Nigeria Hit N19.53 Trillion in January



PenCom Fines Employers N12.1BN over Unremitted Pension Funds
  • Surpass N19 trillion Target for 2024

Total assets under management of the regulated pension industry in Nigeria has increased by 6% or N1.175 trillion to N19.531 trillion as of January 2024 from N18.356 trillion in December 2023.

Latest monthly industry data released by the National Pension Commission (PenCom) showed that this increase marks the strongest monthly growth rate of pension assets in recent months

On a year on year basis, the industry’s overall AUM increased significantly by 28% compared to N15.266 trillion in January, 2023.

Of the total assets, N12.14 trillion is invested in the less risky government securities including representing 62.16%.  N270 billion of the total fund is borrowed by state governments of the federation while corporate debt securities gulped N2.198 trillion of the fund.

Meanwhile, the current valuation of pension assets in the country has surpassed a N19 trillion by the end of 2024 forecast by Agusto & Co, a Pan-African credit rating agency.

The agency projected in its report: ‘The Nigerian Pension Industry – Unlocking Potential Amidst Economic Uncertainties’ released last year that country’s total pension assets will rise to an impressive N19 trillion by the end of 2024.

With the widening net of pension coverage, the industry has continued to operate within a highly regulated environment, positioning itself as a significant player in the financial services sector.

The enactment of the Pension Reform (PFA) Act in 2004 was the turning point for the Nigerian pension industry. The implementation of several pension regulations, following the PFA Act of 2004 has shaped the landscape of the industry.

Notably, the PRA Act 2004 introduced the Contributory Pension Scheme (CPS), an arrangement under which both the employer and employee contribute to the employee’s pension account.

Although the Pension Reform Act 2004 was abolished by the Pension Reform Act (PRA) 2014, the pension industry has continued to deliver impressive growth over the years.

Also, the pension industry has contributed positively to Nigeria’s economic growth due to its crucial role in driving savings and investments.

Despite the remarkable growth witnessed in recent years, expert believe the pension industry still has the potential for significant growth given the relatively underpenetrated state of the industry.

To put into context, Nigeria’s overall pension assets to GDP ratio stands at 8.5% of 2023 GDP. Nigeria’s ratio compares unfavourably with the 29.4% (2020) average for a group of 78 countries based on World Bank data.

Despite the introduction of the Micro Pension Scheme in 2019, which was aimed at increasing the pension participation rate and boosting inclusion in the country, particularly in the informal sector, recent data suggests that the country’s pension coverage is still low.

Nigeria’s low level of pension participation can be linked to a combination of factors, including a high level of unemployment, rising cost of living, sluggish recovery of the economy and low awareness of pension products.

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