Pension payment hits N1.1tn in 2nd quarter of 2024

In the second quarter of 2024, 129,435 pensioners got N1.1tn in lump-sum payments under life annuity, which represents a huge milestone for Nigeria’s pension sector.

Oguche Agudah, the CEO of the Pension Fund Operators Association of Nigeria, made this revelation in a speech on Thursday at the Pension Correspondents Association of Nigeria’s annual conference in Abuja.

A life annuity is a financial product that provides a guaranteed income stream for life in exchange for a lump sum payment or series of payments, offering predictable income, reduced risk of outliving assets, and tax benefits. It is commonly used for retirement planning, pension plans, insurance settlements, inheritance planning, and long-term care funding.

The N1.1tn disbursed in Q2 2024 is an increase from N798.14bn paid to 102,696 applicants in Q3 2022 and N485.16bn disbursed to 71,214 pensioners in Q3 2019.

This trend highlights the consistent growth in pension payouts over the years, demonstrating the impact of 20 years of pension reforms in the country.

Agudah remarked, “PENCAN has been a partner in the pension industry. We hope to be able to do more with PENCAN. We need a lot of enlightenment, and our doors are always open for collaboration.”

The growth in client registrations under the Retirement Savings Account also reflects the expansion of the pension system.

RSA registrations rose from 254,178 in Q3 2007 to over 10.28 million in Q3 2024, showing increasing participation in the pension scheme.

Agudah attributed this growth to reforms in the pension industry, which have broadened access to pension funds and ensured more Nigerians benefit from retirement savings schemes.

The pension industry also saw further growth in programmed withdrawals, with N1.12tn paid to 357,310 applicants in Q2 2024. This is an increase from N887.60bn paid to 315,112 applicants in Q3 2022.

The steady rise in programmed withdrawals underscores the growing demand for pension benefits as more retirees access their entitlements.

Withdrawals of 25 per cent of RSA balances due to job losses also increased, with N247.47bn paid to 483,644 RSA holders in Q2 2024, compared to N182.2bn disbursed to 443,720 RSA holders in Q3 2022.

Death benefits paid to employees also witnessed increases.

In Q2 2024, N451.2bn was disbursed to the families of 104,259 deceased employees, up from N310.43bn paid to 83,533 families in Q3 2022.

The rise in death benefit payments highlights the growing reach of the pension system, providing critical support to beneficiaries of deceased contributors.

The pension industry’s role in housing also expanded, with 5,276 mortgage applications approved in Q2 2024, compared to 746 approvals in Q3 2023. Payments for these mortgages amounted to N47.13bn in Q2 2024, up from N18.98bn in Q3 2023.

As of July 2024, the total assets of the pension industry had grown to N20.87tn, up from N14.42tn in Q3 2022.

Agudah noted that the growth in assets underscores the increasing financial health of Nigeria’s pension system, which has continued to provide a reliable source of income for retirees.

Speaking at the event, the Executive Secretary of the Pension Transitional Arrangement Directorate, Chioma Ejikeme, represented by PTAD’s Head of Communication, Olugbenga Ajayi, emphasised the importance of advocacy in supporting pensioners.

“So far, working with PENCAN, advocacy has been fostered with widespread undiluted information. PTAD has been at the forefront of enabling an environment for the welfare of pensioners. Since inception, pensioners have always been paid their pensions,” she said.

The pension industry, through collaborations and reforms, continues to expand its reach and impact, providing financial security to a growing number of retirees across the country.

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