Rebased GDP: Pension fund inclusion will stimulate scrutiny – Experts

Experts have said that the inclusion of the activities of pension fund administrators in the rebased Gross Domestic Product will lead to more interest and scrutiny in the sector.

At the Sensitisation Workshop on GDP and CPI Rebasing, which was jointly organised by the Nigerian Economic Summit Group and the National Bureau of Statistics in Lagos on Thursday, it was revealed that the activities of pension fund administrators, alongside other previously not included sectors, would now be included in the rebased GDP data.

Presenting the rebased GDP data, the Technical Assistant on Data Analytics, NBS, Moses Waniko, said, “So in the course of the rebasing, there were new areas that we wanted to incorporate into GDP compilation. One of such is digital economy activities; we have also tried to incorporate pension funds into the new rebasing processes. We incorporated the National Health Insurance Scheme, the Nigerian Social Insurance Trust Fund, the activities of modular refineries, and domestic households as employers of labour.

“This is something we did not measure in the current base year, but now we’re measuring it. Quarrying and other mining activities, you will agree with me, need to be measured, and illegal and hidden activities.”

Speaking with The PUNCH on the development, the Head of Financial Institution Ratings at Agusto&Co, Ayokunle Olubunmi, affirmed that the rebasing will bring more scrutiny into the pension sector and encourage improved participation.

He said, “Since 2004, when the new Pension Act commenced operations, you will see that the pension industry has grown significantly, with assets under management exceeding N21tn, and you will also see that activities in the investment space, particularly in the bonds market, have actually been supported by the pension industry, and it has been an aberration that we didn’t even capture what was going on with the PFAs space in the GDP. “What this will do is give us a better picture of the financial sector.

Hitherto, significant financial activities have been excluded from the GDP. With the rebasing, the financial sector will be better captured in the GDP, which will increase the size of the financial sector and bring more light to what’s happening in the pension space.”

He added that except for players in the financial sector, some people don’t even understand what’s going on in the pension industry.

“But now that it is being captured under the GDP, more people will be interested in what’s going on there, understanding it better, even those who are not outside the financial space. It will also help most people. A lot of people don’t take an interest in their retirement savings account and what their PFAs are doing with their funds.

This rebasing will also help them to understand the importance of their funds and also scrutinise and focus on what’s going on in that space,” Olubunmi maintained.

Associate Professor at Lagos State University, Dr. Olufemi Abass, in his comments, said it was a welcome development.

He said, “I think it makes a lot of sense to include pension activities in the rebased GDP. One thing you should know is that our activities. We cannot underestimate the importance of pensions, not even now that pensions are now contributory, unlike before when we had the defined benefits scheme that was solely done by the employers.

“Contributory pension involves elements of investment, and to me, including it in the rebased GDP is a welcome development.”

The last rebasing done in 2014 unveiled a much larger economy, with GDP rising by approximately 90 per cent to N80.22tn from N42.40tn. This increase was largely attributed to the inclusion of both new and previously under-represented sectors, such as information and communication, real estate, healthcare, social services, and professional services.

The new base for the GDP is 2019.