By Babajide Komolafe

Income on Retired Savings Account, RSA, of employees under the contributory pension scheme  rose by 280 per cent to  N61 billion income in 2009, says Pension Commission 2009 report.

According to the report, RSA earned N49.01 billion from interest and coupon during the year, up from N15.23 billion in 2008, while income from dividends rose to N12.47 billion from N770 million in 2008. As a result total earnings on RSA rose by 280 per cent to N61 billion in 2009 from N16 billion in 2008.

The contributory pension scheme came into being in 2004. Under the scheme,   employers and employees to contribute 7.5 per cent each as pension contributions. These contributions are paid into a retired savings account (RSA) opened by the employee with a pension fund administrator (PFA). The savings are invested by PFAs based on investment guidelines of the Commission.

The Commission reported that average monthly contributions into the RSA grew by 26 per cent to N19 billion in 2009 from N15 billion in 2008. The increase was due to the increase in the number of private sector organisations that commenced implementing the new pension scheme in 2009.

Total contributions to the RSA since the inception of the new pension scheme stood at N668.06 billion as at end of 2009, with the public sector accounting  for 60.57 per cent or N404.67 billion while the private sector accounted for 39.43 per cent or N263.39 billion.
Similarly, the Pension Commission an increase in total pension assets.

It stated, ‘’The unaudited value of total pension funds assets increased from N1.098 trillion as at 31st December 2008 to N1.529 trillion as at December 2009, indicating a 39.2 per cent growth. The growth was due to new contributions, capital injection by scheme sponsors’’.
Analysis of how the pension assets were invested during the year revealed change in investment strategies by pension operators. In response to the declining fortunes of the capital market due to the global financial crisis, there was increased emphasis on money market investment during the year. Consequently, 35.45 per cent or N542.22 billion of pension assets was invested in money market during the year, up from 30.25 per cent the previous year.

In the second position was investment in federal government securities, which received 32.61 per cent or N498.88 billion during the year, up from 31.91 per cent. Investment in the Nigerian Stock Exchange (local ordinary shares) fell from 20.07 per cent or N22054 billion  in 2008 to  14.43 per cent or N220.71 billion in 2009. Investment in real estate properties also came down to 9.35 per cent or N142.96 billion from 11.42 per cent or N125.5 billion.’’