2022 Nigerian Pension Industry Report

Overview of the Report

Global pension assets increased by 7% to $56.6 trillion in 2021, owing to favourable investment returns despite the negative effects of the COVID-19 pandemic, as well as greater employment levels in key economies.

The number of enrollees on the Nigerian Pension Scheme rose to 9.5 million in 2021, representing a 3% increase over the 9.2 million enrolees recorded in the prior year. Similarly, the Industry’s assets stood at ₦13.4 trillion (or $32.5 billion) which reflected a growth rate of 9% over the asset size of ₦12.3 trillion reported at the end of 2020 and a compound annual growth rate (CAGR) of 12.2% between 2018 and 2022e. The growth in Pension Assets under Management over the last five years has been increasingly driven by investment returns rather than additional contributions – in line with the global trend. However, given the uncharacteristically low yield environment and weak equities market, investment returns were negative for the first time in five years in 2021.

In 2021, the National Pension Commission (PenCom) increased the minimum capital requirement from ₦1 billion to ₦5 billion and granted Pension Fund Administrators (PFAs) a transition window between 27 April 2021 and 27 April 2022 to comply. The objectives of the recapitalisation exercise were to strengthen the financial stability of operators and enhance the Industry’s capacity to absorb losses. As at the end of April 2022, there were six business combinations resulting in 20 PFAs (2021: 22 PFAs) who had all complied with the new capital requirement. Agusto & Co. anticipates a higher barrier to entry as a result of the increase in the minimum capital requirement and a change in the Industry’s funding structure, resulting from further combinations or new capital injections.

The 2022 Pension Industry report captures the following:

  • An overview of the Global Pension Industry with key emerging trends
  • A description and detailed analysis of the structure and composition of the Nigerian Pension Industry
  • Insights on recent developments and Industry trends, including an overview of the effect of the new capital requirement
  • Key competitive tools pertinent to the success of Pension Fund Administrators in Nigeria.
  • An overview of the key regulators and regulations guiding the Industry
  • An analysis of the Industry’s SWOT
  • Assessment of fund performance (I – IV) and financial condition of the Industry
  • An Agusto & Co risk rating and outlook for the Industry