‘Total Pension Assets’ll Hit N20trn By 2023’

Nigerian pension industry’s net assets is expected to hit the N20tn mark by 2023, recording an average growth of 18 per cent in the next three years leading to 2023, the insurance industry’s net assets, Augusto & Co, a pan-African credit rating agency, has said.

It said in its 2021 insurance industry report that the growth in the pension industry’s managed assets had been largely driven by investment returns and additional contributions, to a lesser extent.

The rating agency noted that the pension industry’s assets under management stood at N12.3tn as of December 31, 2020, representing a 20.6 per cent growth over the N10.2tn reported at the end of 2019 and an 18.3 per cent compound annual growth rate over the last five years.

The report also added that the industry’s annual contributions, over the last five years, had averaged N699bn while withdrawals had averaged about N341bn, translating to a net annual contribution of N347bn and accounting for 26.6 per cent of the industry’s AuM growth over the period.

It said the remaining 73.4 per cent of average growth was attributable to investment returns earned on the portfolios.

Agusto & Co said, “The pension transfer window opened on November 16, 2020 to allow pension retirement saving account holders to switch Pension Fund Administrators once a year at most and no cost. As of the end of the second quarter of 2021, over 25,600 RSA holders with pension assets over N102.5 billion were reported to have changed PFAs.

“We expect that in the subsequent quarters of 2021, the number of transfers will rise further as more enrollees become aware of the transfer process.”

Competition is expected to intensify in the pension industry as PFAs seek to attract new enrollees while retaining existing ones, according to the rating agency.