By Adedapo Adesanya
The National Pension Commission (PenCom) has said that Nigeria’s Pension Fund Assets-to-Gross Domestic Product (GDP) ratio is very low when compared with its counterparts globally.
According to Pencom’s Technical Commissioner, Mr Anyim Nyerere, it currently stands at 8.08 per cent as of the fourth quarter of 2020.
He made the disclosure while speaking at the Chartered Institute of Stockbrokers (CIS) 2021 national workshop last Thursday themed Leveraging the Financial Markets to Achieve Double-Digit Economic Growth for Nigeria.
At the event held in Abuja with several policymakers in attendance, Mr Nyerere noted that the pension fund assets to the GDP was insignificant when compared to other countries like the United States and the United Kingdom.
He also disclosed that the performance was “insignificant” compared to Nigeria’s counterparts in the African region.
“We can see where we are. This is insignificant when compared within the African sub-region. South Africa’s pension [fund] assets to GDP ratio is over 63.29 per cent,” he stated.
Mr Nyerere then noted that despite the relatively low figure, Nigeria was beginning to see a silver lining as evident in the Pension Reforms Act of 2004 which has over the years boosted the sector.
“Nigeria is starting to reap the gains from the pension fund reforms that began in 2004. As of then, we had a pension fund of N2 trillion, but today, the country has a pension fund assets base of N12.657 trillion as at June 2021,” the PenCom top shop said.
He pointed out that despite the laudable development, the sector had been marred by “weak and inefficient administration and financial malpractices.”
Looking at how the pension funds can help develop the Nigerian economy to achieve double-digit growth, he said there are opportunities to access the country’s pension funds to strengthen the financial market for accelerated domestic production and development.
“Globally, pension funds serve as a long term pool of funds, that is increasingly being utilised for the socio-economic advancement of several countries.
“However, because of the nature of the pension fund, regulators and fund managers are bound by their judicial duties to ensure the safety of the funds while also pursuing regulatory fair returns.
“Countries, including Nigeria, have developed their market by creating innovative instruments that have allowed for the utilisation of pension funds to bring about socio-economic development in a sustainable manner,” Mr Nyerere said at the seminar monitored by Business Post.
