Pension

Pension fund investments generate N816.84bn interest, coupon in 2019

*Dividend of N35.43bn

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Chuks Udo Okonta

Investments of pension funds assets by pension fund operators into Fund I, Fund II and Fund III, generated N816.84 billion interest and coupon in 2019, while dividend received stood at N35.43 billion, Inspenonline can report.

Data obtained from the National Pension Commission (PenCom) stated that total interest/coupon received from Fund I, was N2 billion, adding that the interest income was predominantly from Federal Government of Nigeria (FGN) Securities (N1.36 billion or 68 per cent) and that total dividend received was N118 million.

According to PenCom, Interest/coupon received from Fund II, was N509.47 billion, while dividend received was N29.77 billion. The interest/coupon received from investments in FGN Securities represented 80 per cent of the total interest/coupon received during the year, it said.

The Commission noted that the interest/coupon received on Fund III was N305.37 billion, while dividends were N5.54 billion.

It maintained that the net realised gain on disposal of equities and bonds on the Funds amounted to N11.52 billion, adding that this was mainly attributed to realized gains in Fund II & III of N5.97 billion and N5.21 billion, respectively, while Fund I recorded realized gains of N333 million.

The pension industry regulator noted that RSA ‘Active’ Funds recorded mixed fortunes as Fund I recorded net unrealized losses of N69.49 million, while Funds II and III recorded net unrealized gains of N8.19 billion and N18.73 billion, respectively, stressing that most of the unrealized gains were from investments in Bonds that were marked-to-market and recorded increase in prices due to the decline in bond yields, especially in the fourth quarter of 2019.

It posited that the Net inflows of pension contributions which amounted to an average of ₦80 billion monthly is expected to rise mainly due to the ongoing efforts to expand pension coverage and the implementation of additional measures to recover outstanding pension contributions and accrued penalty charges from defaulting employers, adding that these efforts had yielded substantial results during the year under review and are expected to continue in the coming year.

It stated that the Assets under Management (AuM) over the last 5 years had grown at a Compounded Average Growth Rate (CAGR) of 17.6 per cent, a trajectory which is expected to improve considerably due to positive indices in the macroeconomic environment and sustained growth in the economy.

The Commission said it would further enhance the compliance and enforcement mechanisms aimed at ensuring prompt and complete remittance of pension contributions by employers, adding that the continuous review of the investment regulation in line with changing market dynamics would be central to shaping the pension industry.

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