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Pension: 3 PFAs led the performance chart in July 2024 – Report 

BY SAM OTUONYE 

The Nigerian pension industry witnessed varied performances across different Retirement Savings Account (RSA) funds in July 2024, with some Pension Fund Administrators (PFAs) delivering impressive returns despite the challenging economic environment.

According to a data compiled and analysed by Nairalytics, a Research and Analytical platform, nineteen PFAs recorded an average return of 0.69% in the review month, led by Guaranty Trust Pension Manager, Norrenberger Pensions, and Stanbic IBTC Pension Managers.
It would be recalled that the National Pension Commission (PenCom), had announced that total industry assets rose to a record high of N20.48 trillion in June 2024, representing 8.6% of the nation’s GDP, an increase from 7.98% as of the beginning of the year. In the last six months, the total assets increased by N2.13 trillion (+11.6%).
Similarly, total RSA registrations increased to 10.38 million as of the end of June 2024 from 10.19 million recorded as of the beginning of the year, representing a 1.9% YTD increase.

The report noted that conservative funds dominated in July, which was a significant strategic shift highlighting the less risky fund categories, RSA Fund III and IV, delivering the strongest performances in the review month, with average returns of 0.75% and 0.97% respectively. This compares favorably to the more aggressive RSA Fund I, which returned 0.46%, and Fund II, which recorded 0.59%.

Leading PFAs have effectively leveraged the current high-yield environment in the fixed-income market, which has been significantly influenced by the CBN’s substantial interest rate hikes. With interest rates on bonds and treasury bills averaging 19.3% and 22.3% respectively, these PFAs have strategically adjusted their portfolios to capitalize on these lucrative opportunities. Notably, 63.3% of the pension industry’s assets were invested in federal government bonds, valued at N12.96 trillion as of June 2024, while treasury bills, accounting for 2% of the total fund, stood at N399.5 billion.  In accordance with the regulations governing the portfolio mix of RSA funds, the strategic shift towards fixed-income instruments, particularly during a period when variable assets are underperforming, has allowed PFAs with substantial exposure to these risk-free instruments to outperform their peers. Below is the breakdown of the best-performing pension fund managers in the month of July 2024, based on their different Retirement Savings Account (RSA) funds. According to the report the overall best performers in the month under review were:

    • First: Guaranty Trust Pension Managers – 1.07%
    • Second: Norrenberger Pension – 1.04%
    • Third: Stanbic IBTC Pension Managers – 0.96%.
    • Guaranty Trust Pension Managers, formally Investment One Pension Managers led the list of overall best PFA for the month of July, printing a monthly return of 1.07%, largely driven by RSA I and II funds, with 1.25% and 1.23% respectively.
Norrenberger Pensions, formerly IEI-Anchor pension recorded an average return of 1.04%, boosted by impressive returns in the RSA II, III, and IV funds with respective returns of 1.13%, 1.17%, and 1.21%.
Stanbic IBTC pensions ranked third with an average return of 0.96%.

RSA Fund I

First: Stanbic IBTC Pension Managers – 1.25%

 

Second: Guaranty Trust Pension Managers – 1.04%

 

Third: Access Pensions – 0.96%.

The RSA Fund I designed as an aggressive investment option for active contributors aged 49 and below, was the lowest performer in the review month, with an average return of just 0.46%, largely due to negative returns from four PFAs.

 

This fund, which has the highest allocation to risky or variable income instruments, is available strictly by formal request from contributors and is not accessible to retirees or active contributors aged 50 and above. The primary goal of RSA Fund I is to maximize investment returns, with 20% to 75% of its assets allocated to variable income instruments.

In July 2024, Stanbic IBTC Pension Managers led the list with the highest RSA Fund I return, posting a 1.25% gain. This was followed by Guaranty Trust Pension Managers with a 1.04% return, and Access Pensions, formerly known as Guarantee Pension Limited, which recorded a 1% gain for the month.

RSA Fund II

First: Guaranty Trust Pension Managers – 1.23% Second: Pensions Alliance Limited – 1.2%  Third: Norrenberger Pensions – 1.13%.

The RSA Fund II, a balanced fund aimed at preserving capital while seeking moderate long-term returns, posted an average return of 0.59% in the month under review, making it the second-lowest performing category.
Like RSA Fund I, this fund is intended for active contributors aged 49 and below. However, it carries less risk, with 10% to 55% of its assets invested in variable income instruments, making it less volatile compared to Fund I.
Guaranty Trust Pension Managers topped the list of PFAs with the highest RSA Fund II return, achieving a 1.23% gain. Pensions Alliance Limited followed closely with a 1.2% return, while Norrenberger Pensions posted a 1.13% gain for the month.

RSA Fund III

First: Norrenberger Pensions – 1.17%

Second: Nigerian University Pension Management Company – 1.14%

Third: Guaranty Trust Pension Managers – 0.99%.

RSA Fund III serves as the default fund for RSA holders aged 50 to 60 years. This conservative fund is tailored for contributors approaching retirement and those with a low-risk tolerance.
While it is primarily intended for those in the 50 to 60 age range, younger contributors may also choose to invest in this fund category. In the review month, RSA Fund III delivered a return of 0.75%.
Norrenberger Pensions led the pack with the highest RSA Fund III return, achieving 1.17%, followed by Nigerian University Pension Management Company with a gain of 1.14%. Guaranty Trust Pension Managers recorded a 0.99% return for the month.

RSA Fund IV

First: Oak Pensions Limited – 1.29%

Second: Tangerine Apt Pensions – 1.27%

Third: Norrenberger Pensions – 1.21%.

RSA Fund IV is exclusively designed for retirees, and members of Funds I, II, and III are not eligible to invest in Fund IV until they retire. Additionally, once members are in Fund IV, they are not permitted to move out of it. In the review month, RSA Fund IV delivered an average return of 0.97%, making it the best-performing fund category.

Oak Pensions topped the list with the highest RSA Fund IV return at 1.29%, followed by Tangerine Apt Pensions, which posted a gain of 1.27%. Norrenberger Pensions recorded a 1.21% gain for the month.

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