Naira Depreciation Triggers $6 Billion Decline in Pension Funds

Only 7% Of Nigerian Adults Have Pension Accounts - Report

The value of Nigeria’s pension fund saw a significant decline of $6 billion, plummeting by 29% to $14.39 billion in January 2024, compared to $20.41 billion in December 2023.

This revelation comes from the January unaudited report on the pension funds industry portfolio, which attributes the decline to the conversion rate of the naira against the dollar. In January, the value of the pension fund was converted at the rate of N1,356.88/$, contrasting sharply with December’s rate of N899.39/$.

The ongoing struggle of the naira against the dollar, exacerbated by the Central Bank of Nigeria’s intervention since June 2023, has further eroded the value of pension funds in dollar terms.

However, in naira terms, the total assets under the Contributory Pension Scheme saw an increase to N19.53 trillion from N18.36 trillion at the end of 2023, as reported by the National Pension Commission.

A substantial portion of these assets, amounting to N12.14 trillion, was invested in Federal Government securities, reflecting a rise from the previous month’s N11.92 trillion.

Addressing recent allegations, the Director-General of the National Pension Commission, Aisha Dahir-Umar, refuted claims that the commission loaned N10 trillion to the Federal Government. Dahir-Umar clarified that PenCom does not function as a bank and does not manage pension funds on behalf of the government.

According to PenCom’s data, the Retired Savings Account membership as of January 2024 reached 10,223,672, marking a 0.32% increase from December’s figure of 10,191,400.

Abdulqadir Dahiru, Head of the Corporate Communications Department at PenCom, highlighted that the depreciation of the local currency affects not only pension funds but also has wider ramifications for the economy.

Dahiru emphasized that pension funds benefit from being diversified across various investment instruments.

The inflation figure for February, standing at 31.70%, according to the National Bureau of Statistics, further underscores the economic challenges exacerbated by currency depreciation.

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