The depreciated Naira and falling oil prices could not stop pension funds in Nigeria from posting positive performances in Q1, howbeit modest.

This is significant for pension fund contributors as the value of the pension fund is mostly at risk during economic downturns. A lot of Nigerians contribute about 8% of their Basic, Housing and Transport as pension while their employers also contribute a further 10%. The contributions are managed by Pension Fund Administrators of their choice.
Analysis by Quantitative Financial Analytics shows that Nigerian pension fund managers posted modest return of between 0.29% and 2.95% for RSA funds and between 1.58% and 3.46% for Retiree funds. Pal Gratuity funds also recorded impressive but modest returns as Pension Alliance Guinness Fund and Pension Alliance Emenite Gratuity Fund, posting 2.57% and 2.5% respectively. The pension funds, which gained from falling yield and rising bond prices in the first quarter of the year seem to have benefited from the CBN’s decision to hold the interest rate close to 11% for a greater part of the quarter.

All the pension funds largely out-performed the NSE Pension Index, which posted a negative 14.86% in Q1. It is still arguable, however, if the NSE Pension Index is a good bench mark for the pension funds, because, while the pension funds are largely invested in fixed income securities (Bond and Treasury Bills), the NSE Pension Index is predominantly an all equity based index. The largest gain in the pension fund managers’ returns came from the Retiree Fund category which also shows lower volatility and risk.

The fact that even the few pension funds with equity exposures decreased the equity weighting in their portfolios, opting instead for government and corporate bonds, meant that pensions were somewhat insulated from the ills that bedevilled the market during the first quarter of the year.

In a quarter where the All-Share Index performed abysmally at -11.65%, and all the other market indexes making losses, it is a thing of joy to retirees and pension fund investors that the pension fund managers came off the quarter with positive returns.

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