Professional Service

Pension Fund Records First Dip In 18 Months

Nigeria’s pension fund has declined for the first decline in 18 months on the back of portfolio rebalancing by Pension Fund Administrators, Punch reports.

Monthly data from the National Pension Commission (PenCom) showed that the pension fund declined by 0.47 per cent to N19.669tn in March from N19.759tn in the previous month.

Before this dip, the pension funds enjoyed an upswing for over a year.

The pension fund last declined in September 2022, dipping 0.01 per cent.

The Chief Operating Officer of Investdata Consulting Limited, Ambrose Omorodion, blamed the portfolio rebalancing activities of PFAs prompted by the changes in the interest rates environment between February and March for the dip.

The Central Bank of Nigeria (CBN) hiked the Monetary Policy Rate to 24.75 per cent from 22.75 per cent in March, marking a second consecutive increase after February’s four per cent upward review.

The CBN has maintained its hawkish stance in a bid to tackle persisting inflation that had gone as high as 33.2 per cent in March, according to data from the National Bureau of Statistics.

Omorodion said, “The decline observed in the pension fund can be traced to the portfolio rebalancing of PFAs. It should stabilise into the future.”

Meanwhile, the PenCom data showed that there had been a slight improvement in the appetite for equities, which rose 5.94 per cent to N2.32tn in March from N2.19tn in the previous month.

Analysts at the Pension Fund Operators Association of Nigeria (PenOP) had said that the increase reflected growing confidence in the equity market among pension fund players.

PenOP disclosed that in the first quarter of 2024, its involvement increased notably, with a rise of 1.7 per cent in investments in FGN securities from N11.92tn to N12.20tn.

During this period, cash and other assets also witnessed a modest increase of 0.9 per cent, whereas corporate debt securities rose from N1.91tn to N2.07tn, reflecting pension funds’ growing interest in corporate debt instruments.

Meanwhile, PenOp has unveiled a stakeholders’ enlightenment programme designed to educate, inform and enlighten various stakeholders on the activities and operations of the pension industry.

According to the Chief Executive Officer of PenOp, Oguche Agudah, the programme would feature interviews that would be interactive and conversational across several products and services rendered in the pension industry to simplify them.

He said, “We felt that these interviews and conversations were necessary to bridge the gap between the knowledge of various stakeholders and the pension industry.

“We realise that pensions can sometimes seem complex, but we hope to simplify these concepts to make them better appreciated and to enlighten various stakeholders on the functions of PFAs, PFCs, how pensions are invested and some of the other things that we feel people do not have a grasp on.”

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