Pension assets to hit N11.1tn in 2016 –PenCom

The pension industry is expected to triple its assets the next three years to $70bn (about N11.1tn), as the government targets small businesses to get more people into the pension scheme, the National Pension Commission has said.

Reuters, in a report on Wednesday, quoted the Head of Research, PenCom, Mr. Umaru  Aminu, as saying this in Abuja, adding that the commission was looking at how to attract more employees of small enterprises to the scheme.

He said 50 million people were employed in small businesses with up to four employees — everything from barber’s shops to small accountancy firms.

“We expect to triple (pension assets) in two or three years’ time (by) targeting the (small business) sector,” Aminu told Reuters in a telephone interview.

The country’s pension assets have grown from about $10bn in the last eight years, split between four million retirement savings accounts.

Aminu said pension assets stood at $23.5bn at the end of September.

He said contributions currently were mainly from half of Nigeria’s 12 million people working for the government or big companies but there were untapped opportunities in the much bigger small business sector.

He, however, noted that there were some challenges too.

“It is an unwieldy sector; a sector that has no regular income and it is difficult to track with no statistics on the people,” Aminu said, adding that many did not have bank accounts.

He said half of Nigeria’s population of about 160 million people were under the age of 20 years and many were not of working age or unemployed.

The growth in pensions will also give a boost to fund flows into equities and bonds in the country and could also help to improve liquidity on the stock market.

Regulations currently allow Nigerian fund managers to invest half of their portfolio in equities, 35 per cent in the money market and the rest in government bonds.

The increase in pension assets should ease liquidity problems that had dogged one of Africa’s biggest stock markets since the financial crisis in late 2008, analysts said.

Large foreign funds tend to stay away because daily turnover in individual stocks rarely exceeds more than $1m, too small for many funds.

The stock exchange’s main index, which ended 2009 around 70 per cent below its peak, has risen by more than 39 per cent this year compared to a decline of four per cent in its emerging market peers, the report stated.

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