By Aduragbemi Omiyale
The desire to allow Pension Fund Administrators (PFAs) to unlock opportunities in the stock market has led to the creation of an index on the Nigerian Exchange (NGX) Limited to track the performance of securities that adhere strictly to the profitability and dividend payment criteria, along with other parameters specifically tailored to the pension industry.
The NGX partnered with the National Pension Commission (PenCom), the sector’s regulator, to design the Pension Broad Index (NGXPENBRD) on June 15, 2023, providing a broader benchmark for equities investment by the pension industry.
With an all-encompassing approach, the index imposes no limits or caps on the number of stocks it can include as constituents.
Currently featuring 84 equities, the NGX Pension Broad Index aligns seamlessly with the provisions of the Pension Reform Act of 2014 and the Amended Regulation on the Investment of Pension Fund Assets proposed by PenCom.
The NGX Pension Broad Index has exhibited robust performance since its launch last year. The index stands out for its well-diversified composition, encompassing high-quality stocks across key sectors, including banking, insurance, oil & gas, consumer goods, and industrial goods.
The NGX Pension Broad Index is poised to play a pivotal role in guiding investment decisions and enhancing the overall stability of Nigeria’s pension industry.
The acting chief executive of NGX, Mr Jude Chiemeka, while expressing gratitude for PenCom’s insightful partnership, said, “The collaboration between NGX and PenCom underscores a shared commitment to fostering transparency, compliance, and growth within the Nigerian capital market.
“I am pleased with the approval granted by the National Pension Commission for the NGX Pension Broad Index (NGXPENBRD) to serve as the benchmark index for Nigeria’s pension industry equity investment portfolios.
“This further solidifies the credibility of the index as a reliable yardstick for evaluating the equity performance of pension industry investments.”
