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Chuks Udo Okonta
Pension Fund Operators (PFOs), which are Pension Fund Administrators (PFAs); Closed Pension Fund Administrators (CPFAs) and Pension Fund Custodians (PFCs) generated a combined earnings of N136.45 billion in 2020, the National Pension Commission (PenCom) has said.
Data obtained from PenCom revealed that PFAs generated total earnings of N109.68 billion in the financial year ended 31 December 2020, which indicated an increase of three per cent when compared with the N106.70 billion recorded in 2019.
PenCom noted that the combined operating expenses incurred by the PFAs amounted to N55.20 billion while Profits before Taxes (PBTs) amounted to N54.48 billion, adding that the major source of income for the PFAs was fund management fees, which accounted for over 80 per cent of total Income.
The PFAs, according to PenCom recorded a combined Return on Assets of 30.07 per cent and a combined Return on Equity of 35.19 per cent, which indicated that the PFAs sustained their profitability in the year under review.
The pension sector regulator said the six CPFAs generated a total revenue (income and transfers from Sponsors) of N2.68 billion, which was a 7.58 per cent decrease compared to the N2.90 billion generated in 2019, adding that the major source of revenue for the CPFAs were inflows from their sponsor companies, which constituted 55 per cent of their total revenue, while management fees and investment income accounted for 41 per cent and four per cent, respectively.
It maintained that the CPFAs incurred a total expenditure of N2.74billion and a combined profit of N52.38million in the year ended 31 December, 2020, while operating expenses comprised mainly of staff costs, which accounted for over 69 per cent of operating expenses.
The PFCs, PenCom noted generated a combined income of N24.09 billion, representing a 2.75 per cent decrease when compared with the N24.77 billion generated as at 31 December 2019, stating that major source of income for the PFCs was custodial fees, which constituted 80 per cent of their total income, while investment income and other income accounted for about 20 per cent of PFCs total income.
It posited that the PFCs incurred total operating expenses of N7.73billion and a combined profit of N16.36billion in the year ended 31 December 2020, which indicated a 12.61 per cent decline in the PFCs’ profitability when compared to the N18.72 billion recorded in December 2019.
PenCom stated that the combined paid-up capital of the PFAs stood at N31.46 billion, the CPFAs had N306.47million while that of the PFCs stood at N8 billion and that the total Shareholders Fund (SHF) of the PFAs was N150.04 billion, indicating an increase of 19.79 per cent, when compared with the N125.25 billion reported as at 31 December 2019.
The SHF of the CPFAs amounted to N1.71billion, representing a decrease of 0.58 per cent, when compared with N1.72 billion reported in the corresponding period in 2019 while the PFCs reported a total SHF of N47.79 billion, an increase of 5.36 per cent, compared with N45.36 billion reported in 2019.
PenCom said the total Working Capital (WC) of the PFAs stood at N117.95 billion, which was an increase of 21.77 per cent when compared with the N96.86 billion, reported as at 31 December 2019, adding that the industry average was N5.36billion, with all PFAs reporting positive WC as at 31 December 2020.
It stressed that the CPFAs reported a total WC of N1.22 billion, which was a lower amount when compared to the N1.37 billion reported in the corresponding period of 2019, adding that similarly, the PFCs reported a combined WC of N44.64billion, which was lower compared to the N47.71 billion reported as at 31 December 2019 and that the average industry Working Capital for PFCs was N11.16 billion, with all PFCs reporting positive WC as at 31 December 2020.
