By Toyin Aina
GLOBALLY, 2022 was a difficult and very challenging year for financial markets. Smarting from the debilitating impact of the COVID-19 pandemic and the ongoing Russia-Ukraine war, Central Banks across the world resorted to monetary policies such as rate hikes, which, in turn, drove bearish sentiments across most asset classes. Nigeria, not being an oasis in this global financial desert, was not insulated from the crisis. As global financial markets struggled with unprecedented inflationary pressure, the Central Bank of Nigeria, CBN, responded with an increase in the key monetary policy rate from 11.5 per cent to 17.5 per cent by the end of 2022. But as global financial markets, including Nigeria’s, quaked, the National Pension Commission, PenCom, stepped up to the plate.
The result is that despite the difficult macroeconomic environment, aggregate pension assets under the Contributory Pension Scheme, CPS, hit N15 trillion in 2022 according to data from PenCom, the body established by the Pension Reform Act 2004 to regulate, supervise and ensure the effective administration of pension matters in Nigeria. By this feat, PenCom has become an important stabilizing force in the country’s financial market. But the achievement has also been made possible because of the resilience of the country’s 22 licensed Pension Fund Administrators, PFAs, particularly in 2022 when investment returns across the four main retirement savings accounts funds grew in leaps and bounds. But this is not surprising coming at a time the Nigerian pension industry entered a period of heightened competition following the opening of the transfer window in 2020 and the N5 billion recapitalisation exercise, resulting in a greater level of healthy competition among players with a focus on investment performance, service levels and brand visibility.
As the pension industry continues to show remarkable resilience in the face of global financial headwinds, the achievements of two PFAs remain particularly outstanding. According to recent data released by PenCom, the Nigerian Police Force, NPF, Pensions and Access Pensions closed 2022 as the top PFAs by investment returns across the four main retirement savings accounts funds. The implication is that for the board, management and staff of the NPF Pensions Limited, 2022 was a year of bountiful harvests for their clients – the indefatigable officers and men of the Nigerian Police.
To keen industry watchers, NPF Pensions’ incredible feat of posting outstanding investment returns across the four main retirement savings accounts funds was not mere happenstance. It was the product of hard work and painstaking adherence to standards.And what is even more remarkable about the performance of the pensions industry is not just the fact that the average yearly returns for pension funds I, II, III, and IV of 8.97 per cent, 9.55 per cent, 9.86 per cent, and 10.22 per cent respectively were broken, the sheer numbers of the PFAs that pulled off this feat is also an indication that the industry is headed north.
But it is noteworthy that the NPF Pensions Limited, Access Pensions and Stanbic IBTC Pensions were tops on the table of those that broke the axiomatic glass ceiling by exceeding what had hitherto been accepted as standard. On the Fund I performance table, a fund meant only for those aged 49 years and below, NPF Pensions posted a staggering 11.86 returns on investment, coming only after Stanbic IBTC Pensions, which came tops with 13.02 per cent. On the Fund II table, which is the default fund for all active pension fund contributors that are 49 years and below, NPF Pensions topped the table with 11.17 per cent return on investment.
The NPF Pensions was also on the honours list in the Fund III stream, which is the default fund for active contributors that are 50 years and above, as the second best performing PFA in December with a 1.54 per cent return on investment, and also second best for the full year, with 10.77 per cent. The single-client PFA was equally one of the best ten performing PFAs on the Fund IV performance table, which is strictly for retirees, with a return on investment of over 11 per cent.
Since this result was made public, police officers – serving and retired – who are the primary beneficiaries of the prudent management of their investments by their PFA, have been walking on the moon, literally. When the NPF Pensions Limited came on board nine years ago, the idea was to have a PFA exclusively responsible for pension assets of all police personnel, in accordance with the dictates of the Pension Reform Act (PRA 2014). Coming after 20 other PFAs had been up and running, it was not going to be easy. But it was a child of necessity and the Pension Reform Act was clear on what the new PFA was all about – exclusively dedicated to serve the police with a vision “to be the benchmark in Pension Fund Administration in Nigeria.”
This sterling performance is yet another proof that the organization has lived up to the vision of being a benchmark in the highly competitive industry. It has equally lived up to its more ambitious mission of providing quality customer and financial advisory services to stakeholders and adopting investment strategies that would yield the best possible returns on their pension assets, with the 2022 performance. Today, as a child of necessity created to meet the distinctive needs of the personnel of the Nigeria Police Force, the NPF Pensions Limited’s achievements are not only impressive but have, indeed, become benchmarks in the industry. That is exactly what the 2022 return on investment result proved most conclusively.
But industry aficionados aver that credit should go to the regulator – PenCom. “PenCom has done exceedingly well as a regulator. The continuing growth of the industry couldn’t have been possible if PenCom as the regulator has not been up and doing,” said Timothy Adekunle, an investor.
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