BY: CHARLES ABUEDE
Total pension contributions remitted to individual retirement savings accounts (RSAs) took a nosedive by 3.2 percent year on year to N879.14 billion in 2021, after reaching N908.09 billion in 2020. It brought the total pension contributions as at December of 2021 to N7.58 trillion, the latest annual reports from PenCom seen by Business A.M. shows.
According to the report, the cumulative pension contributions from inception to the end of the fourth quarter of 2021 amounted to N7.58 trillion, showing an increase from N7.37 trillion as at the end of Q3 2021.
Out of the total, the public sector accounted for N107.78 billion or 51.82 percent, while the private sector contributed N101.71 billion or 48.12 percent.
Also, the aggregate pension contributions of the public sector increased from N3.65 trillion to N3.82 trillion at the end of Q3 2021. Similarly, the aggregate pension contributions of the private sector also increased from N3.46 trillion to N3.56 trillion as at Q3 2021.
Taking an overview of the pension industry fund portfolio, PenCom said at the close of the year, the total value of Pension Fund assets was N13.42 trillion. The amount comprised of N9.47 trillion in RSA’ Active’ Funds (RSA Funds I, II III and V); N1.07 trillion in RSA Retiree Fund IV; N1.52 trillion in CPFAs; N1.35 trillion in Approved Existing Schemes (AES) Funds and N16.13 billion for RSA Fund VI (Non-Interest Fund), Active and Retiree.
The report shows that the assets were majorly invested in Federal Government of Nigeria (FGN) Securities. The asset accounted for 65.35 percent of total pension assets. The composition of investments in FGN Securities was as follows: FGN Bonds: 94.90 percent; Treasury Bills: 2.91 percent; while Agency, Sukuk and Green Bonds accounted for about 2.19 percent.
Similarly, the industry Net Asset Value (NAV) increased by N423.65 billion or 3.26 percent to N13.42 trillion as at Q4 2021 compared to a NAV of N13.01 trillion recorded in the prior quarter. The fourth quarter growth was higher than the growth of N343.99 billion or 2.72 percent recorded in Q3 of 2021, mainly due to contributions received and the market valuation of FGN bonds and equities.
A further analysis of the report shows that the value of investments in quoted ordinary shares stood at N1.04 trillion (7.73%) of total Assets under Management (AuM) indicating an increase of N59 billion (6.04%) compared to the N978.69 billion in Q3. The increase in the value of investments in domestic quoted equities was primarily due to the appreciation in the prices of some stocks during the reporting period, as the Nigerian Stock Exchange Pension Index (NSE-PI) appreciated by 2.69 percent in Q4 of 2021. The value of investments in FGN Securities increased by N551.05 billion (6.70%) to N8.77 trillion at the end of December 2021, from N8.22 trillion at the end of the third quarter. The increase in the value of investments in FGN Securities was majorly due to additional investments in this asset class during the quarter.
Reporting on the recovery of outstanding pension contributions from defaulting employers, the commission said the sum of N984.30 million, which comprise N406.42 million in principal contribution and N577.87 million in penalties were recovered from 36 defaulting employers during the fourth quarter.
Meanwhile, 18 defaulting employers have been recommended for appropriate legal action. Also, the report shows that a total of 1,526 organisations had remitted a total sum of N4.05 billion into the Retirement Savings Accounts of their employees totalling 15,603.
Furthermore, 10 fund administrators processed and approved requests for contingent withdrawals amounting to N7.53 million from 22 micro pension participants in Q4, taking the cumulative to N18.9 million since the start of the scheme in June 2021, while 39 participants of the micro pension scheme converted to the mandatory CPS and the sum of N596,339.27 was transferred to their respective RSAs. This brings the total conversion balance to N3,680,292.77 from 259 Micro Pension Contributors as at 31 December 2021.
At the close of Q4 in 2021, PenCom said it granted approval for the transfer of N10.77 million to the RSAs of 180 members after it received applications for transfer of NSITF contributions on behalf of 208 NSITF contributors. However, the Commission declined the request for the transfer of N2.39 million to 28 NSITF contributors due to differences in the amount submitted by PFA and the balances on the NSITF database.
On a similar note, the Commission approved monthly pensions in the sum of N54.59 million to 2,305 NSITF pensioners. Meanwhile, it granted approval for the refund of N1.18 million to eight military personnel and other security agencies who were exempted from the contributory pension scheme.