Pension: Gross asset value dips N51bn in February on back of FIS depreciation

TOTAL GROSS AS SETS VALUE OF pension in February declined by N51 billion owing to the depreciation in fixed income securities (FISs) in the trading portfolios of the approved existing schemes (AES), RSA Funds II & IV and Closed Pension Fund Administrators (CPFA), thereby creating unrealized losses to market FISs.

The information is contained in the unaudited report on the pension funds industry portfolio for February 2021 made available on the PenCom website.

From the report, the existing scheme and CPFAs for the period under review was valued at N1.24 trillion and N1.47 trillion against the N1.28 trillion and N1.48 trillion recorded the previous month while the RSA funds II and IV were valued at N5.37 trillion and N974 billion in February compared to the N5.39 trillion and N975 billion accounted for in January.

The total investment in domestic ordinary shares and foreign ordinary shares in February amounted to N856 billion and N94 billion respectively while total FGN securities - consisting of FGN bond, treasury bills, agency bonds, Sukuk and green bond - were valued at N8.1 trillion.

While the sum of N117 billion was invested into state government security in February, the report shows that N870 billion was invested into corporate debt securities; entailing corporate bonds, corporate infrastructure bonds, corporate green bonds. Supra-national bonds, however, saw no investment for the period.

Also, the bank placement and commercial paper, which make up the local market securities amounted to N1.6 trillion, and the foreign money market securities was valued at N8 billion. Consequently, mutual funds amounted to N158 billion.

Meanwhile, the dip in pension asset value reflected in spite of the 28,300 increase (representing 0.30 percent) in RSA registration recorded during the period.

Assuring stakeholders, Aisha Dahir-Umar, directorpeneral, National Pension Commission, in a statement said that recovery would set in before the year runs out. “RSA holders have no reason to be worried about the reported decline of pension assets.

“Pension funds are longterm funds and there will always be volatility in the short-medium term, but the long-term objective is to earn fair returns on pension fund assets. Barring any exogenous shocks, the financial markets will begin stable recovery in Q2 or Q3:2021 as economic activities begin to rally towards their pre-lock down levels,” Dahir-Umar assured.

She also disclosed that the key to hastening recovery and growing pension fund within the period in view is for all hands to be on deck. “The commission and industry stakeholders have adopted various strategies to diversify the investment portfolio of pension assets and deepen investment channels with a particular focus on pension fund investments in Infrastructure and Housing.