Connect with us

News

NSE introduces pension index

Published

on

In from Success Allantee…

The Nigerian Stock Exchange (NSE) has introduced a pension index that will serve as benchmark to gauge the performance of the country’s pension industry and pension fund managers.

According to the NSE, the creation of the NSE Pension Index will encourage the development of other products such as Exchange Traded Products (ETP’s) and Index Futures.

The Index also provides a tracking mechanism for pension fund administrators (PFAs), custodian to the PFAs (CPFA) and others that follow the National Pension Commission (PENCOM) guidelines.

The NSE Pension Index includes the top 40 companies in terms of market capitalisation and liquidity. Adjusted market capitalisation of a listed company is the number of its listed shares, multiplied by the closing price of that company, multiplied by a capping factor.

The index values, which would be available as from January 2, 2013 was exposed to the investing public at the weekend. The index has a base of 1000 as at December 31, 2012.

Read Also: NSE LIVE!… Dangote Cement leads Equities to N203b loss

The index is also expected to serve as a benchmark for measuring performance and reporting performance to RSA Holders.
The stocks that formed the index were picked based on their market capitalization from the most liquid sectors in line with the pension reform guideline. Also companies to be included in the index must have free float factor of at least five per cent, making the index the first index on the NSE that gave consideration to free float.

Also, companies that formed the index must have paid dividend or bonus at least once in the last five years.

The NSE Pension Index is designed as a total return index so that it can accurately measure equity portfolio performances, which capture returns from dividends, price changes and realized gain.

However, as a total return index, the pension index will only be available at the end of day as there would be no intra-day values.

Ripples… without borders, without fears

Join the conversation

Opinions

Support Ripples Nigeria, hold up solutions journalism

Balanced, fearless journalism driven by data comes at huge financial costs.

As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.

If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.

Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.

Donate Now

Investigations