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Money Counsellors Annual Report on Pensions (MCARP 2022)

Michael Oyebola

MoneyCounsellors.com, a flagship independent research and information service on the Nigerian Mutual & Pension Industry, launches today our Annual Report on Pensions (MCARP) with the very first (Year 2022) edition. The report presents a holistic review of the last five years of activities of all PFAs, and the funds managed, including a 5-year summary of company and fund accounts, ratios, fund performances, fund performance rankings vs. peers, asset allocation, AUM ranking, RSA ranking and much more.

The Report is a must-read for all 9.8m RSA holders and those thinking of signing up for a PFA or switching a PFA. The report reports on

  • Audited accounts 5 years – the reporting period

As pension savings are long-term investments, we have focused on the last 5-years and will continue to do so. As such this report covers the 5-year period to December 2021. Fund II and Fund IV have full coverage. The take-off date for the multi-fund structure was 2 July 2018, as such most operators launched their Fund I and Fund III soon thereafter, and others later. Guidelines for Fund V (Micro Pensions) were released in September 2018 with take-off soon thereafter and the operational framework for non-interest funds – Fund VI (Non-Interest Active) and Fund VI (Non-Interest Retiree) were released in June 2021 with funds launched afterwards.

  • Retirement Savings Accounts

Savings Accounts, RSA as they are commonly referred to are that personal accounts that an individual legally owns and is identified by a Personal Identification Number (PIN) issued by the regulator. Whilst each fund has several RSA holders, the sum of all RSA holders for each respective PFA is presented in ranked order on page 12 of the report.

  • Assets Under Management (AUM)

RSA holders have the combined sum of their own (employee) contribution and their employers’ contribution credited to their account. These contributions are pooled together and invested by the PFA’s investment team, and this adds up to become the investible AUM. Each audited fund has total net assets, and these in turn, added together become the AUM of each respective PFA which is presented in the ranking on page 13 of the report.

  • Asset Allocation

When PFAs collect both the employee and employer contributions of each RSA holder, they then subsequently invest the funds in a pool of different assets. In each respective PFA’s fund report we publish the asset allocation of their funds. On pages 14-16, we have presented asset allocation for the whole industry as published by the regulator, PenCom. We have grouped all assets into just 5 classes – Bonds, Equity, Money Market, Cash and Others to ensure we have comparative consistency across funds and regulatory publications.

  • 5-Year Review & Analysis of each of the 7 different funds available

There are currently seven (7) distinct types of funds available to RSA holders by regulation. All PFAs offer Funds named Fund I to Fund IV, whilst only some offer Funds V, VI (Non-interest Active) and VI (Non-interest Retiree). We have analysed and presented all available audited accounts. At the beginning of each PFA report, we start with an analysis of the corporate entity (i.e., the PFA) managing the pension funds before we progress to each fund they manage.

  • The Funds

    • Fund I is accessible strictly by formal request of the contributor and only for those aged 49 years and below.
    • Fund II is the default fund for all active contributors that are 49 years and below.
    • Fund III is the default fund for active contributors that are 50 years and above.
    • Fund IV is strictly for retirees only.
    • Fund V is only for Micro Pension Fund contributors.
    • Fund VI (Non-interest Active) is for those that choose to have their contributions invested in Non-interest Money and Capital Market Products.
    • Fund VI (Non-interest Retiree) is for those that choose to have their contributions invested in Non-interest Money and Capital Market Products.
  • Fund Performance Ranking

At the end of each corporate report is the ranking of the performance of each of the respective funds managed by the PFA. Whilst we have ranked the funds against each other, we observe that the industry still needs valid benchmarks for each of the fund groups to enable the presentation and reporting of non-misleading performance metrics. The aim here, in line with best practice performance requirements, is to get fund managers to perform against benchmarks, and not only against one another.

  • Peer Ranking and Annual Performance

The audited Net Asset Value (NAV) per unit is included in most audited accounts published except for a few. This unit price from year to year has been taken and used to calculate the annual price return for each fund. At the conclusion of the review of all funds and accounts, we collate the results and rank each fund’s performance accordingly against peers with published information.

  • Cumulative and Discrete Monthly Returns

PFA’s calculate and publish daily prices in accordance with PenCom’s regulations. These published prices have been used to calculate and chart each fund’s cumulative monthly and discrete monthly returns over the 12-month period 1 January to 31 December 2021 as well as the 1-year daily volatility of those returns and the 2-year and 3-year average monthly returns and volatility.

 

You can download the full report by clicking on the link below:

https://drive.google.com/file/d/1G71qfG-qmqt1pFECOuIMjgHaW8voMp_Y/view

With MCARP, your pension pot couldn’t be closer to you, and we’re delighted to be your reliable partner on this crucial journey of life.

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