NIGERIAN PENSION FUND HIT N6,164BN 2016 BUT....

In the very trying year 2016, total managed assets of the Nigerian pension scheme grew by N861.94bn, second only to 2013's N906.48bn increase in 10 years since 2007.

According to Nigerian pension administration data released by the National Bureau of Statistics, NBS, after the top growth in 2013, 2014 followed with only N552.88bn before there was a slight recovery to N691.85bn top up in 2015.

The total managed pension administration asset value was N6164bn compared to N5302.82bn in 2015 and N4610.97bn in 2014.

However, in terms of % growth, none of the last three years turned out to be the lowest within the 10 years. The low was 2014's 13.6% growth, followed by 15% in 2015 before a little improved 16.3% last year.

Whereas, top % growths within the 10 years were 2009's 39.2%; 2008's 34.8%.and 2010's 32.7%.

In other words, in the last three years, the % growth in managed pension assets was either below inflation rate or just barely at par. 

To make matters worse, the growth recorded seemed to have come from contribution inflow and far less from return on investment.

According to the NBS, average return on RSA active fund in 2016 was 11.59%, very much below inflation rate but quite an improvement on 8.65% in 2015 and 6.13% in 2014.

When pension fund asset grow more by contribution inflow and less through returns in investment, danger lies ahead when the scheme may be top heavy with beneficiaries as against contributors.

From the data, in 20 years virtually all of 2016 contributors would have become benefactors depending on the scheme for survival at above 60 years.

Presently, says the NBS, 48.54% of contributors to the compulsory scheme were aged below 40 years while only 6.53% were already above 60 years.

True, the average Nigerian population is still very young and so, there may be no decrease in young contributors in the near future but it must be noted that the average return on investment has lots of room for improvement to make the scheme more reliable, now and in the near future.

By 2016 safety held the key to asset acquisition and so, says NBS by 2016 71.8% or N4427.30bn of the pension assets were Nigerian government bonds while ordinary shares accounted for N584.62bn or 9.48% and money market instruments took N401.06bn or 6.51%.

As at 2016, more managers looked towards foreign outlets for investment compared to 2014 when local outlets had the highest % share in 10 years.

Foreign component hit a low of 1.29% in 2014 then recovered to 1.36% in 2015 before 2016's 1.44%., the 4th highest % share since 2007's exceptional 3.58% foreign outlet share.