By Niyi Jacobs
The year 2024 was a difficult one for Nigeria, with inflation, high interest rates, and economic pressures putting significant strain on businesses and households alike. Key economic indicators, including inflation at 34.80% in December and the Monetary Policy Rate (MPR) at 27.50%, created a challenging landscape for investors. The yield on a 1-Year Treasury Bill stood at 28.20%, while long-term government bonds saw more moderate returns, with the 5-year FGN Bond yielding 21.19% and the 10-year FGN Bond offering 18.10%.
Despite these economic hurdles, Nigeria’s pension funds showed resilience, with many delivering impressive returns in the face of market volatility. Various pension funds across different categories experienced varied performances, but some funds, in particular, stood out for their strong returns.
Aggressive Growth Funds Outperform
In the Aggressive Growth Fund category, which is known for its high-risk, high-reward profile, NPF Pensions emerged as the standout performer, delivering an exceptional return of 38.87%. This outperformance set the bar high for other Pension Fund Administrators (PFAs). Access ARM Pensions came in second with a return of 21.76%, followed by Veritas Glanvills Pensions with 20.14%. Other notable performers included FCMB Pensions and Leadway Pensure, both of which posted returns of nearly 20%.
Despite strong overall returns in this category, some PFAs underperformed. Tangerine APT Pensions recorded the lowest return at 7.01%, which raised concerns among contributors about the sustainability of their growth. Nupemco and Norrenberger Pensions, which posted returns of 10.68% and 12.21%, respectively, also trailed behind their competitors.
Balanced Funds Maintain Steady Growth
For the Balanced Funds, a more moderate-risk category, NPF Pensions again took the lead with a return of 31.56%. Other strong performers included PAL Pensions with 22.64% and CrusaderSterling Pensions with 21.54%. These funds exhibited strong management and reliable investment strategies, appealing to contributors seeking stable, long-term growth.
Middle-tier funds such as Oak Pensions and Fidelity Pension Managers, with returns of 20.17% and 18.53%, respectively, demonstrated solid growth, just above the average. However, some funds struggled to meet expectations. FCMB Pensions, CardinalStone Pensions, and Leadway Pensure PFA posted returns in the 16-17% range, slightly below average but still respectable in comparison to broader market conditions.
Pre-Retirement Funds Show Mixed Results
The Pre-Retirement Fund category also displayed varied results. NPF Pensions again led with a remarkable return of 30.68%, far exceeding the average return of 15.31%. Fidelity Pension Managers followed with 17.09%, demonstrating consistent performance. Other notable performers included PAL Pensions and CrusaderSterling Pensions, both achieving returns of around 16%.
However, some PFAs struggled in this category. NLPC Pension, with a return of just 10.23%, significantly underperformed, while Tangerine APT Pensions and Leadway Pensure PFA also posted returns below the average.
Retiree Funds Reflect Stability
Retiree Funds, which cater to pensioners who are in the withdrawal phase of their pension cycle, also saw a range of outcomes. NPF Pensions topped the category with a return of 18.05%, showcasing its ability to balance risk and ensure stable returns for retirees. CrusaderSterling Pensions and Access ARM Pensions followed closely with returns of 15.41% and 15.19%, respectively.
However, some PFAs saw weaker returns. Fidelity Pension Managers and Veritas Glanvills Pensions, although posting returns of 14.58% and 14.33%, were slightly above average but did not achieve the same level of growth as the top performers. The lowest performer in this category was NLPC Pension, which posted a return of just 10.69%.
Micro Pension Funds Show High Potential
The Micro Pension Fund category, which targets low-income earners and small businesses, saw Access ARM Pensions leading the charge with a strong return of 21.66%. Trustfund Pensions followed closely with 21.05%, highlighting the growing interest in micro pensions as a viable long-term investment option. Other strong performers included Stanbic IBTC Pension Managers and PAL Pensions, which posted returns of 19.44% and 19.05%, respectively.
While the top performers delivered strong returns, there were some underperformers in the Micro Pension category. CardinalStone Pensions, which posted the lowest return of 6.23%, struggled to match the performance of its peers, raising questions about its investment strategies.
Non-Interest Funds Show Resilience
The Non-Interest (Active) Fund, designed for investors with a preference for Sharia-compliant investments, saw CrusaderSterling Pensions leading the category with a return of 20.63%. Trustfund Pensions followed closely with a return of 19.83%, while PAL Pensions and Stanbic IBTC Pension Managers posted returns of 18.55% and 17.62%, respectively.
In contrast, Tangerine APT Pensions again struggled, recording a return of just 7.40%, which was far below the category average of 16.25%. Other PFAs such as Nupemco and Guaranty Trust Pension Managers also performed below average, further indicating the challenges faced by certain fund managers.
Conclusion
In conclusion, while 2024 presented significant challenges for Nigeria’s economy, pension funds across different categories managed to deliver solid returns, with some PFAs standing out as top performers. NPF Pensions demonstrated exceptional growth across multiple fund categories, while Access ARM Pensions and CrusaderSterling Pensions also showcased strong performances.
Investors are encouraged to carefully evaluate the performance of their chosen PFAs, as the variance in returns highlights the importance of selecting funds with proven strategies that align with individual risk appetites and financial goals. As we move into 2025, the focus will be on how PFAs adjust their strategies to navigate evolving economic conditions and continue to provide reliable returns for their contributors.
