Job losses and rising inflation are posing significant risk to the pension industry, Agusto & Co has disclosed.
The firm also predicted in a new report that pension assets would hit N19tn in 2024.
It revealed this in a new report titled, ‘The Nigerian pension industry – Unlocking potential amidst economic uncertainties.’
While noting growth in the sector, it said the growth could be impeded by increased emigration and more.
The firm stated that, “However, it is critical to recognise that increased emigration, job losses, and rising inflation may pose a significant risk to our projections.
“These factors have the potential to impede pension asset growth by delivering negative real returns on investments.”
According to the firm, pension assets are supposed to grow by 13 per cent year-on-year, and hit N19tn by the end of 2024, due to growth across certain verticals.
It said, “Going forward, Agusto & Co. foresees a 13 per cent year-on-year growth in the pension industry’s AuM, propelling the total pension assets to an impressive N19tn by the end of 2024.
“We envision that this growth will be supported by an anticipated increase in rates on fixed-income securities, specifically bank placements, and a continued upswing in the stock market.”
The firm disclosed that Nigeria had the second-largest pension industry on the continent with assets under management hitting N16.1tn ($34.9bn) as of May 13, 2023.
It stated that the 13.5 per cent growth witnessed in the value of assets under management was fueled by robust investment returns, and to a lesser extent, by additional contributions.
Commenting on the growth of the number of contributory pension members, the firm said, “As a result, the total membership of the Contributory Pension Scheme reached 9.9 million RSA enrollees as of 31 May 2023, reflecting a three per cent growth compared to the corresponding period.
“The upswing in the number of enrollees can be attributed to the commendable rise in compliance levels across both the private and public sectors, coupled with the intensified marketing activities undertaken by Pension Fund Administrators.”