Economy
Nigerian Pension Funds Outperform Bench Mark Index
By Quantitative Financial Analytics
Nigerian pension funds once again recorded another year of brilliant performance in 2016 roundly beating the NSE Pension Index by wide margins.
The NSE Pension index ended the year 2016 at 810.04 points from its 2015 value of 815.16 points, thereby ending the year down by 5.13 points or -0.63%.
Savings Retirement Accounts (RSA):
Except for APT Pension Retirement Saving Account which ended the year with a negative performance of 22.96%, having lost N0.65 on the unit price of the RSA, every other RSA ended the year with positive performance of 8% or greater. The highest return of 12.67% came from AXA Mansard Pension Retirement Savings Account, followed by Future Unity Glanvills (FUG) RSA with 11.93%
Retiree Accounts:
The performance of the Retiree Accounts followed closely that of the RSA but unlike the RSAs, the Retiree Accounts did much better with no losses recorded by any one of them. Trust Pension Fund Retiree Account led the performance league with 14.68%. All the Retiree Accounts but one, recorded double digit positive return in 2016.
Asset Allocation is Everything
Asset allocation has been said to be responsible for most of the investment fortunes in history. That too can be rightly said about Nigerian pension funds. The implication of asset allocation is that it matters how a portfolio is divided between Bond, Equities, Cash, Money Market and other asset classes. Most Pension funds in Nigeria allocate at least 75% of their Asset Under Management (AUM) to fixed income securities (Government Bonds, Treasury Bills and corporate bonds). The interest rate on those assets has been on the increase over time and the CBN has signaled that it does not plan to reduce the rates any time soon. Though there is an inverse relationship between interest rate (yield) and bond prices, the increasing yield environment especially at the shorter end of the yield curve implies that matured bonds or treasury bills are being reinvested at higher yields and lower prices which benefits the pension funds. By having much of their AUM in fixed income securities, these PSAs tend to be insulated from the downside pressure of the stock market.
Asset Characteristics too
Another pointer to the performance of the Pension funds can be seen by looking at how they behave in relationship to the entire stock market. All the Pension funds have Betas of less than 1 indicating that they do not move in tandem with the stock market. This indication is also supported by the low R-Squared of the pension funds. All these relatively low statistics derive from the fact that majority of the pension fund assets are held in fixed income and money market instruments whose correlation with the market is relatively low.
A beta of 1 indicates that the security’s price moves in tandem with the market but a beta of less than 1 means that the security is imperially less volatile than the market while a beta of greater than 1 indicates that the security’s price is theoretically more volatile than the market. R-Squared on the other hand is a measure of the percentage of a portfolio’s or security’s performance that is attributable to the performance of its bench mark.
The implication of this is that for risk averse investors planning and saving for their retirement, it may be more prudent to overweight on pension fund assets by making additional voluntary contributions rather than investing same in the regular stock market.
Risk Adjusted Performance
Though the RSAs and other Retiree accounts are expectedly and comparatively less risky than similar products like Fixed Income Mutual Funds (as evidenced by their standard deviation of returns), their performance is not as mouthwatering as they seem when analyzed on a risk adjusted basis. Most of the pension funds have negative Alpha and negative Sharpe ratio, according to research by Quantitative Financial Analytics.
Alpha is a measure of the return on an investment compared to a suitable market index such that an alpha of 1% means the investment’s return over a period was 1% better than the market during that same period while an alpha of -1 means the investment underperformed the market. Sharpe ratio measures the risk adjusted performance of an asset or portfolio taking into consideration the prevailing risk-free rate.
The major reason for the negative alpha and Sharpe ratio is that the risk-free rate in Nigeria is quite high, (a risk-free rate of 15% was used for this analysis). Granting the low risk characteristics of the pension funds and the rising interest environment in Nigeria and compared to the performance of other asset classes, it will be appropriate to say Bravo to the pension fund managers for a job well done in 2016.
Contacts: [email protected]
By Adedapo Adesanya
The Nigeria Revenue Service (NRS) has unveiled a unified Taxpayer Identification (Tax ID) system for all taxable persons across the country as part of efforts to strengthen tax administration and improve transparency.
The agency announced the development in a public notice issued jointly with the Joint Revenue Board (JRB) on Monday.
According to the notice, the initiative is backed by Sections 6, 7, and 8 of the Nigeria Tax Administration Act, 2025, which mandate every taxable person in Nigeria to obtain a Tax ID, in a wider move to expand the country’s tax base.
The NRS said the new framework is designed to create a centralised and harmonised taxpayer database that would enhance interactions between taxpayers and revenue authorities at both federal and sub-national levels.
“The Tax ID will serve as a single, unified identity for all taxpayers, enabling seamless interaction with tax authorities at both federal and sub-national levels. It is designed to consolidate taxpayer records, eliminate duplication, and ensure more efficient management of tax-related information,” the agency stated.
The revenue agency explained that the new system would simplify tax compliance procedures, including taxpayer registration, filing of returns, and payment processes.
According to the NRS, the framework is also expected to improve accountability and reduce leakages in tax collection by creating better visibility and tracking of taxpayer information nationwide.
“The initiative will simplify tax compliance processes, including registration, tax filing, and payment procedures. The system will improve transparency by enabling better visibility and tracking of taxpayer records while reducing leakages and improving accountability in tax collection. The framework will also harmonise taxpayer information across all levels of government,” the notice added.
The agency further disclosed that the new Tax ID system would replace the existing Tax Identification Number (TIN) Validation API currently used by Ministries, Departments and Agencies (MDAs), financial institutions, and other organisations for taxpayer verification.
By Adedapo Adesanya
Three bellwether stocks weakened the NASD Over-the-Counter (OTC) Securities Exchange by 1.31 per cent on Monday, May 18.
This brought the NASD Unlisted Security Index (NSI) by 54.71 points to 4,133.70 points from 4,188.41 points, and shrank the market capitalisation by N32.73 billion to N2.473 trillion from N2.506 trillion.
Yesterday, FrieslandCampina Wamco Plc contracted by N12.45 to sell at N146.55 per share compared with last Friday’s closing price of N159.00 per share, Central Securities and Clearing System (CSCS) Plc declined by N2.34 to N70.00 per unit from N72.34 per unit, and NASD Plc lost 50 Kobo to trade at N34.50 per share versus N35.00 per share.
The trio overpowered the N5.56 gained Newrest Asl Plc. This stock ended the trading session at N61.15 per unit, in contrast to the previous session’s N55.59 per unit.
During the trading day, the volume of securities traded by investors slid by 56.1 per cent to 514,142 units from 1.2 million units, and the value of securities dropped 29.8 per cent to close at N17.4 million versus N29.8 million, while the number of deals jumped 12.5 per cent to 27 deals from 24 deals.
Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with 3.4 billion units sold for N8.4 billion, followed by CSCS Plc with 60.8 million units exchanged for N4.1 billion, and Okitipupa Plc with 27.9 million units traded for N1.9 billion.
GNI Plc also ended the day as the most traded stock by volume on a year-to-date basis with 3.4 billion units worth N8.4 billion, trailed by Resourcery Plc with 1.1 billion units valued at N415.7 million, and Infrastructure Guarantee Credit Plc with 400 million units transacted for N1.2 billion.
By Adedapo Adesanya
It was a horrible day for the Nigerian Naira in the different segments of the foreign exchange (FX) market on Monday, May 15, as its value further weakened against the United States Dollar.
In the black market window, the Naira lost N5 against the Dollar yesterday to sell for N1,390/$1 compared with the previous value of N1,385/$1, but at the GTBank forex counter, it remained unchanged at N1,383/$1.
In the Nigerian Autonomous Foreign Exchange Market (NAFEX), the Nigerian currency depreciated against the greenback by N2.66 or 0.19 per cent to sell for N1,373.70/$1 compared to last Friday’s rate of N1,371.04/$1.
Equally, it fell against the Pound Sterling in the same market segment by N9.05 to trade at N1,839.66/£1 versus N1,830.61/£1, and lost N5.42 on the Euro to close at N1,600.49/€1 versus N1,595.07/€1.
The performance of the local currency during the session indicates early worries despite all signals pointing to stability, amid improved Dollar sales by the Central Bank of Nigeria (CBN), with steady, higher oil receipts to bolster the nation’s reserves.
Activity at the market showed that turnover rose 57.3 per cent to $76.29 million on Monday from $48.49 million posted on Friday.
Over the weekend, S&P raised Nigeria’s credit ratings for the first time since 2012 and highlighted improved FX market liquidity and $10 billion turnover recorded in April 2026 as one of the major gains of the CBN-led FX reforms.
The agency said the liberalisation of the exchange rate has bolstered access to foreign currency and enabled a market-driven exchange-rate environment while supporting investor and consumer confidence.
Meanwhile, the cryptocurrency market was bullish on Monday as investors monitored developments in the Iran conflict and weighed the impact of surging oil prices on inflation and US interest-rate expectations.
Ethereum (ETH) gained 0.7 per cent to trade at $2,134.10, Cardano (ADA) rose by 0.6 per cent to $0.2515, Solana (SOL) expanded by 0.3 per cent to $85.11, Binance Coin (BNB) jumped 0.2 per cent to $643.29, TRON (TRX) increased by 0.03 per cent to $0.3565, and Bitcoin (BTC) advanced by 0.02 per cent to $76,912.12.
On the flip side, Dogecoin (DOGE) slid by 1.5 per cent to $0.1044, and Ripple (XRP) decreased by 0.5 per cent to $1.38, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 apiece.
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