Nigeria’s pension assets under the contributory pension scheme are projected to expand by 8.5 per cent this year regardless of the economic impact of the coronavirus pandemic.
Business intelligence and risk rating firm, Agusto & Co. said this in its pension industry report on Tuesday, titled ‘Pension Assets Estimated to Grow by 8.5 per cent in 2020 Despite a Slowdown Due to the COVID-19 Pandemic.’
Nigeria’s total pension assets stood at N10.8 trillion in May, up from N10.6 trillion in April, the National Pension Commission said last month.
“Going forward, Agusto & Co expects a considerable slowdown in assets under management growth driven by lower contributions as unemployment is expected to rise significantly given the weakened macroeconomic environment following the COVID-19 pandemic.
“Job losses are expected to trigger higher benefit withdrawals as disengaged enrolees seek access to the 25 per cent lump sum drawings permitted by the National Pension Commission regulations for employees out of work for more than three months,” Agusto & Co said.
The firm expects investment performance to decline steeply in line with lower yields on government securities, which provides over 70 per cent of the industry’s asset allocation.
“Nonetheless, we note positively the favourable demography of enrolees, which has over 73.8 per cent below the age of 50 indicating relatively low expectations of liquidity events such as lump-sum payments, annuities and programmed withdrawals.
“We expect AuM to continue to grow albeit at a much slower pace of 8.5 per cent in 2020 and rising to 12 per cent in 2021, which is well below the compound annual growth rate of 17.2 per cent over the last five years,” the report added.
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