A report by the National Pension Commission (PenCom) says assets under the Contributory Pension Scheme rose by N842.73bn in the first half of 2022 to hit N14.27tn as of the end of June.
The commission made this know in its ‘Unaudited report on pension funds industry portfolio for the period ended 30 June 2022; Approved Existing Schemes, Closed Pension Fund Administrators and RSA funds (Including unremitted contributions @CBN & legacy funds).
Data from the report showed that N9tn of the total funds was invested in Federal Government securities, comprising bonds and treasury bills.
Other investment portfolios where the funds were invested include domestic and foreign ordinary shares; corporate debt securities comprising corporate bonds, corporate infrastructure bonds, corporate green bonds, and supranational bonds.
According to PenCom, the total number of RSA holders stood at 9,795,957 during the period under review.
The Pension Reform Act, which led to the CPS, was inaugurated in 2004. It provides a contributory arrangement in which the employer and employee contributions to the workers’ RSAs.
The funds which are kept by the Pension Fund Custodians are managed by the Pension Fund Administrators.
According to the Pension Funds Operators Association of Nigeria (PenOp), the CPS has helped to foster a savings culture in Nigeria.
The Chief Executive Officer, PenOp, Oguche Agudah, said prior to the enactment of the act, Nigeria did not have large pools of domestic savings.
He said, “Many Nigerians do not have any other form of savings, except through this Contributory Pension Scheme. What we should be doing as a nation is to encourage more of these savings rather than looking to dismantle the system. This is probably the only form of savings most Nigerian workers are able to put aside for their retirement years
“As a matter of fact, what we need to promote, and the pension industry is leading on that, is to encourage more workers to add to their statutory deductions while working, as this would enable them shore up their balances over time.
“What we need to advocate more is the consistency and discipline in the contributions that will even remove the need for any large lump sum payout when retired.”
Explaining how the savings work for the contributors, he said, “If a worker were to save N20,000 consistently every month for 15 years with an interest rate of 10 per cent per annum compounded for the 15 years, at the end of the period, he would have amassed over N16m. This is the power of consistency and compounding which the current system provides, and which should be encouraged.”
He added, “If you were wealthy while working, healthy savings, like a pension, will make you wealthier. Thus, the pension will make you comfortable in retirement.”
The PenOp boss said under the CPS, it is the worker’s savings in his RSA plus investment returns that he gets out.