Nigeria’s pension funds for the month of May 2024 surpassed its N20tn benchmark after increasing in value by 2.23 per cent to the tune of N20.23tn within the month-to-month period.
The National Pension Commission, PenCom, disclosed this in a recent unaudited report on the pension funds industry portfolio for the period which ended May 31, 2024.
According to the report, the Pension Funds Administrators’ investment in FG securities remained high and increased within the period under review as it cornered 63.22 per cent of the entire funds while total investment in government securities stood at N12.79tn from N12.40tn in April.
While experts have attributed the PFAs’ interest in government securities and money market instruments to the hawkish stance of the Central Bank of Nigeria, which has seen it raise benchmark interest rates in a bid to reduce market liquidity, PFAs also dropped about 10.83 per cent of the funds in corporate debt securities, with corporate bonds getting the largest share.
Moreover, investors, especially pension funds, have shifted more capital to fixed-income instruments in order to increase the returns on their investments and contributors’ contributions due to the alluring rates currently available.
The money market’s high interest rate environment had reportedly caused pension fund investments to slightly decline from N1.95tn to N1.93tn in the prior month while May saw a rise in the desire for mutual funds unlike the month of April which did otherwise and that market segment saw a decrease during tthe period.
In April, mutual funds reportedly dipped by 19.93 per cent month-on-month to N85.19bn from N106.39bn in March but recorded an upswing to N95.28bn in May.
Pension funds further increased by N440.40bn monthly by the end of May, becoming the second-highest monthly increase recorded in 2024.
The highest increase which was recorded in January peaked at a month-on-month increase of N1.18tn while the total pension funds within the first five months of the year, have appreciated by N1.87tn.
On a year-on-year basis, pension funds had increased by N4.12tn.
In a related development, following what the National Insurance Commission described as increased complaints by annuitants and insurance claimants against African Alliance Insurance Plc in respect of the company’s delay and/or inability to fulfil its obligations, NAICOM had reportedly ordered African Alliance Insurance Plc to resolve and ensure the settlement of outstanding claims from its customers.
This was as membership of the Retired Savings Account also increased by 356,795 or 3.57 per cent to 10,351,624 between May 2023 and May this year.
According to NAICOM, while it warned that warned that it would not hesitate to act if African Alliance Insurance Plc defaults on its timelines, also asked the company to submit a turnaround plan for addressing the challenges currently faced by the company, which necessitated putting the company under the commission’s regulatory order.
According to the about page of its website, NAICOM which was established in 1997 by the National Insurance Commission Act 1997 is responsible for ensuring the effective administration, supervision, regulation and control of insurance business in Nigeria.
It also seeks to protect insurance policyholders, beneficiaries and third parties to insurance contracts.
