Nigeria lags peers with pension contribution to GDP at 6.5%

Nigeria is behind its Africa peers as it accounts for one of the lowest pension asset contribution to Gross Domestic Product (GDP) in the region.
BusinessDay analysis of six Africa countries in relation to what percentage their various pension assets contributes to GDP saw Africa’s largest economy ranking the third lowest in the region.
Namibia with 91.7 percent assets of pension funds to GDP topped the ranking, followed by South Africa, the region’s second largest economy with 75.1 percent and Kenya came next with 13.1 percent, leaving Nigeria, Ghana and Egypt to occupy the bottom list with 6.5 percent, 3.8 percent and 1.7 percent respectively.
Chief Executive, Eguarekhide Longe of AIICO Pensions said the pension industry has strong potentials.
“Nigeria pension industry can do a lot more, when you look at South Africa’s pension industry, you can see the intricate impact it is making on their economy, that is where Nigeria should be going,” Longe said.
Another industry analyst said the Nigeria pension industry can grow larger. “That is to say it can have more impact on the individual lives of the citizens, if more people are covered for pension,” the analyst said on the condition of anonymity.
Meanwhile, the Asset under Management (AUM) for Nigeria’s pension industry also lagged that of South Africa, as compiled by BusinessDay.
South Africa’s pension industry, lunched in 1996 has about $258 billion of AUM while Nigeria had AUM of $24.5 billion, although it was set up in 2004, as compiled from PENcom website.
Industry experts however attributed the second position occupied by Nigeria to the fact that the pension industry in Africa’s most populous nation was created at a time when it peers had long existed.
Other countries’ AUM as analysed by BusinessDay were; Namibia with $10.8 billion, Kenya, launched in 1965 has AUM of $10.4 billion, and Ghana with $1.7 billion as at December 2017.
Pension funds’ assets are defined as assets bought with the contributions to a pension plan for the exclusive purpose of financing pension plan benefits. The pension fund is a pool of assets forming an independent legal entity.

The 14 years old National Pensions Commission was set up by Nigeria’s government to regulate, supervise and ensure the effective administration of pensions, including the Nigeria Social Insurance Trust Fund, and to issue guidelines on pension fund investments.

Industry regulator, the National Pension Commission (PenCom) had disclosed during the third edition of the National Association of Insurance and Pension Correspondence Conference in Lagos that the number of contributors under the Contributory Pension Scheme (CPS) has grown by 312, 291, increasing from 7.89 million as at December 2017 to 8.14 million as at June, 2018.
According to the commission, the net assets value of the pension fund was N8.23 trillion as at June, 2018, representing an increase of N716.94 billion up from the value of N7.52 trillion as at 31st December, 2017.
Although, only about 10 percent of the working population of Nigeria have keyed into the contributory pension scheme, as compiled by BusinessDay.

Endurance Okafor, Oghogho Edosomwan