The value of the pension fund in dollar terms declined by 29 per cent to $14.39bn in January 2024 compared to $20.41bn in December 2023.
According to the January unaudited report on the pension funds industry portfolio, the value of the pension fund was converted at the rate of N1,356.88/$ in January from N899.39/$ in December, leading to the decline.
The naira has been struggling against the dollar since the country’s exchange rate was in June 2023 by the Central Bank of Nigeria.
The further depreciation of the naira this year has reduced the value of the pension funds in dollar terms.
In naira terms, the total assets under the Contributory Pension Scheme rose to N19.53tn from N18.36tn at the end of 2023, according to data from the National Pension Commission.
According to the report, N12.14tn of the value of the assets was invested in Federal Government securities, higher than N11.92tn from the previous month.
Earlier this month, the Director General of the National Pension Commission, Aisha Dahir-Umar, denied allegations that the commission loaned N10tn to the Federal Government.
Dahir-Umar said that PenCom was not a bank and did not warehouse or manage pension funds, adding that the Federal Government did not obtain a N10tn loan from the commission.
She remarked, “Investments by the PFAs in the securities of the Federal Government of Nigeria are not loans as erroneously portrayed, but investments in securities, through bonds and treasury bills, as approved by the relevant government agencies, in this case, the Debt Management Office and Securities and Exchange Commission. They are traded on authorised capital markets. That is, the Nigerian Exchange Limited and FMDQ OTC Securities Exchange.”
The PenCom data showed that the Retired Savings Account membership as of January 2024 stood at 10,223,672, indicating a 0.32 per cent increase over December’s figure, which was 10,191,400.
In a previous chat with The PUNCH, the Head of the Corporate Communications Department, PenCom, Abdulqadir Dahiru, said that the depreciation of local currency affected not only pension funds but had a wider effect on the economy.
Speaking on what the commission was doing to hedge against the microeconomic headwinds, he said, “Naira devaluation did not just affect pension funds; it affected everybody, and it is a twin thing. You have inflation and you have devaluation.
“So, anybody who has money in the bank can tell you what inflation has done to his money. It reduces the value of the currency because then you need more of that currency to buy the same amount of the goods and services.”
According to Dahiru, pension funds have an advantage in that they are invested in many instruments.
Nigeria’s inflation figure for February stood at 31.70 per cent, according to the National Bureau of Statistics.