Pension

Leadway pays over N175bn retirement benefits to 85,000 customers

Published

10 months ago

July 11, 2023

NewsDirect

Leadway Pensure says it has paid not less than N175 billion in retirement and terminal benefits to over 85,000 of its customers since the inception of the Contributory Pension Scheme (CPS) in 2004.

Team Lead, Customer Relationship Management Department of Leadway Pensure, Mr Kelechi Nwabalogu, said in an interview on the sidelines of a media training in Lagos.

Nwabalogu said that Leadway Pensure shareholders’ funds stood in excess of N8.6 billion, higher than the required N5 billion by the National Pension Commission (PenCom).

According to him, Leadway Pensure was formed by a consortium of three finance service organisations namely; Leadway Holdings Ltd., MBC Securities and Prestige Assurance Plc.

He noted that in terms of quality assurance, PenCom had adjudged the PFA as one of the best in the industry, which signifies its quality service delivery and best in class corporate governance.

Speaking on the 25 per cent Retirement Savings Accounts (RSA) balance for mortgage approved by PenCom, Nwabalogu stated that the company was committed to providing financial support to its RSA holders by accessing the fund and becoming house owners before retirement.

He noted that RSA holders must, however, meet the conditions and guidelines stipulated by PenCom to access the fund.

“Some of the conditions are that; the RSA of the applicant shall have both employer and employee’s mandatory contributions for a cumulative minimum period of 60 months.

“An offer letter for the property duly signed by the property owner and verified by the mortgage lender.

“The application for equity contribution for residential mortgage shall be in person and not by proxy, among others,” he said.

PenCom, in September 2022, approved guidelines for RSA holders to access a residential mortgage through their RSAs, in line with Section 89 (2) of the Pension Reform Act 2014 (PRA 2014).

The Commission’s guideline states that RSA holders can use 25 per cent of their RSA balance toward the payment of equity for a residential mortgage.

Pension

Pension Fund Index record 44 per cent gains YTD in stock market rally

Published

10 months ago

July 4, 2023

NewsDirect

The Nigerian Pension Fund Index gained a whopping 16 per cent in the month of June as investor sentiments sent stocks soaring to record highs.

The NGX data also shows the Pension Fund Index has returned a whopping 44 per cent YTD or 88 per cent in annualised returns one of the best six months since we started tracking the index performance.

The NGX Pension Fund Index in Nigeria is a benchmark that monitors the progress of pension fund assets under management (AUM) in the country. Its purpose is to serve as a standard for evaluating the performance of pension fund investments in Nigeria.

The index comprises highly capitalized and easily tradable stocks that are prevalent in the pension fund industry. They include heavyweights like the FUGAZ, SWOOTs, etc.

According to the NGX, The NGX pension tracks the top 40 companies in terms of market capitalization and liquidity. The positive performance of the index is likely to benefit pension fund contributors, especially those who select aggressive fund categories.

The performance of the pension funds in the first half of the year is also likely to lead to a windfall for pension fund administrators who earn fees from their assets under management.

This performance does not also come as a surprise as about 116 stocks out of 157 posted positive gains in the month YTD June 30th, 2023. Out of the 116 stocks that posted positive gains, about 103 posted double-digit gains. Another 84 stocks beat inflation most of which are captured in the pension fund index.

Records from Pencom also show PFA’s added N127 billion to invest in equities in the first quarter of 2023 up by 16 per cent. It is likely that the allocation may have increased in the second quarter of the year as investors anticipate a smooth transition of power.

However, it is unlikely to have surpassed 10 per cent as most of their funds are allocated to safe fixed-income instruments, despite offering lower yields. Records also show yields for fixed-income securities have been delivering negative real returns as the inflation rate jumped to 22.4 per cent.

Pension Funds have a limit to how much of their funds they can allocate to equities. According to the Pencom regulations Funds I, II, III, IV, V, and VI can only allocate a maximum of 30 per cent, 25 per cent, 10 per cent, 5 per cent, 5 per cent, and 25 per cent respectively.

PencCom records also show the RSA Fund II, which is the default RSA Fund under the Multi-Fund Structure, maintained the largest share of the Active RSA Funds as it represented 60.15 per cent of the RSA ‘Active’ Funds. The RSA Fund Fund III is next with 38.74 per cent. Meanwhile, the more aggressive RSA Fund 1 had just 0.79 per cent.

Thus, Fund 1 which is suitable for young contributors who have a long-term investment horizon and can tolerate high volatility will likely miss out on the gains recorded in June.