MoneyCounsellors.com, a flagship independent research and information service on the Nigerian mutual and pension industry, today launches our Annual Report on Pensions (MCARP) with the first edition (year 2022). The report presents a holistic review of the last five years of activities of all AFPs and managed funds, including a 5-year summary of company and fund accounts, ratios, fund performance, fund performance rankings, funds vs. pairs, asset allocation, AUM ranking, RSA ranking and much more.
The report is a must-read for all 9.8 million RSA holders and those considering joining or changing PFAs. The report informs about
Audited accounts 5 years: the reporting period
Since 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 through December 2021. Fund II and Fund IV have full coverage. The launch date of the multi-fund structure was July 2, 2018, so most operators launched their Fund I and Fund III shortly after, and others later. The guidelines for Fund V (Micro Pensions) were published in September 2018 with takeoff shortly thereafter and the operational framework for the interest-free funds: Fund VI (Not active with interest) and Fund VI (Retiree without interest) were published in June. 2021 with funds released after.
Retirement Savings Accounts
Savings Accounts, RSA, as they are commonly known, are personal accounts that are legally held by an individual and are identified by a Personal Identification Number (PIN) issued by the regulator. While each fund has multiple RSA holders, the sum of all RSA holders for each respective PFA is presented in rank order on page 12 of the report.
Assets under management (AUM)
RSA holders have the combined amount of their own (employee) contribution and their employers’ contribution credited to their account. These contributions are pooled and invested by the PFA investment team, and this is aggregated to become investable AUM. Each audited fund has total net assets, and these, in turn, added together become the AUM of each respective AFP that is presented in the classification on page 13 of the report.
When AFPs collect employee and employer contributions from each RSA holder, they then invest the funds in a pool of different assets. In each respective PFA’s fund report, we publish the asset allocation of its funds. On pages 14-16, we present the industry-wide asset allocation as published by the regulator, PenCom. We have grouped all assets into just 5 classes: Bonds, Stocks, Money Market, Cash and Other to ensure we have comparative consistency across funds and regulatory publications.
5-year review and analysis of each of the 7 different funds available
There are currently seven (7) different types of funds available to RSA holders by regulation. All the AFPs offer Funds called Fund I to Fund IV, while only some offer Funds V, VI (Active without interest) and VI (Withdrawn without interest). We have analyzed and presented all available audited accounts. At the beginning of each PFA report, we begin with an analysis of the corporate entity (ie, the PFA) that manages the pension funds before moving on to each fund they manage.
- Fund I is accessible strictly by formal request of the taxpayer and only for persons 49 years of age or younger.
- Fund II is the default fund for all active taxpayers who are age 49 or younger.
- Fund III is the default fund for active taxpayers age 50 and older.
- Fund IV is strictly for retirees only.
- Fund V is only for Micro Pension Fund contributors.
- Fund VI (Interest-Free Assets) is for those who choose to invest their contributions in Capital Market Products and Interest-Free Money.
- Fund VI (Retirees Without Interest) is for those who choose to invest their contributions in Money Without Interest and Capital Market Products.
At the end of each corporate report is the performance ranking of each of the respective funds managed by the AFP. Although we have ranked the funds against each other, we note that the industry still needs valid benchmarks for each of the fund groups to enable presentation and reporting of performance metrics that are not misleading. The goal here, in line with best practice performance requirements, is to get fund managers to perform against benchmarks, not just against each other.
Peer Ranking and Annual Performance
The audited net asset value (NAV) per unit is included in most but a few published audited accounts. This year-over-year unit price has been taken and used to calculate the annual price performance of each fund. At the end of the review of all funds and accounts, we compile the results and rank the performance of each fund according to the peers with published data.
Cumulative and discrete monthly returns
PFAs calculate and publish daily prices in accordance with PenCom regulations. These published prices have been used to calculate and plot the discrete and cumulative monthly returns for each fund over the 12-month period from January 1 to December 31, 2021, as well as the 1-year daily volatility of those returns and the returns. 2 years and 3 years. Volatility and average monthly returns for the year.
You can download the full report by clicking on the following link:
With MCARP, your pension fund couldn’t be closer to you, and we’re excited to be your trusted partner on this crucial journey of life.
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