PenCom, NGX Introduce NGXPENBRD: A Wider Equity Benchmark for Pension Industry

The National Pension Commission (PenCom) and the Nigerian Exchange Limited (NGX) have jointly unveiled the NGX Pension Broad Index (NGXPENBRD), aimed at enhancing the investment landscape for Nigeria’s pension industry.

The NGX Pension Broad Index is designed to track the performance of equity securities that fulfill specific criteria related to profitability and dividend payments. Unlike its predecessor, the NGX Pension Index, the new index imposes no restrictions on the number of stocks that can be included, offering a more comprehensive benchmark for equity investments.

As of its launch, the NGX Pension Broad Index consists of 88 carefully selected equities, all of which adhere to the regulations outlined in the Pension Reform Act of 2014 and the Amended Regulation on the Investment of Pension Fund Assets by PenCom.

Jude Chiemeka, the divisional head of Capital Markets at NGX, expressed his appreciation for PenCom’s collaboration in developing the NGX Pension Broad Index. He emphasized the significance of this broader benchmark, stating that it provides Pension Fund Administrators (PFAs) with access to a more extensive selection of high-quality stocks compared to the limited universe of the NGX Pension Index, which comprises only 40 stocks. Chiemeka further revealed that the NGX Pension Broad Index is positioned to replace its predecessor as the primary benchmark for the pension industry in the near future.

To be included in the NGX Pension Broad Index, companies must meet certain eligibility criteria, including a track record of taxable profits in at least three of the five years preceding the investment. Additionally, they must have a history of paying dividends or issuing bonuses in at least one of the past five years. Moreover, companies must maintain a Free Float Factor of at least 5% in accordance with the Exchange’s free float rules.

With the introduction of the NGX Pension Broad Index, stakeholders anticipate greater diversification and improved investment opportunities within the pension industry, potentially leading to enhanced returns and long-term growth for pension funds.

July 29, 2023