Rebased GDP: Experts Predict More Attention on Pension Funds

• In the wake of varied reactions that trailed the decision to rebase GDP, experts have commended the NBS for including PFAs
• They note that capturing the activities of PFAs in the GDP was long overdue and is very important to have a better picture of the financial sector
• The NBS announced last weekend that several sectors and areas not previously captured in the GDP would now be captured in the rebased GDP

Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.

Experts have said that the inclusion of the activities of pension fund administrators in the rebased Gross Domestic Product will lead to more interest and scrutiny in the sector.

Experts have commended the National Bureau of Statistics (NBS) for incorporating the activities of pension fund administrators into the rebased Gross Domestic Product (GDP). They noted that this will draw greater attention and scrutiny to the sector.

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They add that it will also highlight the growing role of the Pension Fund Administration in the economy and lead to more focused regulation and investment.

Dr Olufemi Abass, an Insurance Expert and Associate Professor at Lagos State University, said that the move to include pensions makes a lot of sense, especially since contributory pensions have elements of investment.

Abass described it as a welcome development saying;

“We cannot underestimate the importance of pensions, not even now that pensions are now contributory, unlike before when we had the defined benefits scheme that was solely done by the employers”.

GDP Rebasing will give a better picture

For Mr. Ayokunle Olubunmi, Head of Financial Institution Ratings at Agusto&Co, the new move's highlight is that it will shed more light on the activities within the pension sector.

He noted that with the growth recorded in the pensions industry since 2004, it was instructive to bring it into the GDP rebasing so that stakeholders could have a better picture.

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He stated;

“You will also see that activities in the investment space, particularly in the bonds market, have been supported by the pension industry, and it has been an aberration that we didn’t even capture what was going on with the PFAs space in the GDP”.

Olubunmi noted that for decades, the happenings in the Pension sector had remained hazy, except for players in the space. He described the GDP rebasing move as important to capture significant financial activities that were earlier excluded.

He explained;

“A lot of people don’t take an interest in their retirement savings account and what their PFAs are doing with their funds. This rebasing will also help them to understand the importance of their funds and also scrutinise and focus on what’s going on in that space.”

Adding more sectors to rebased GDP

Recall that the NBS had revealed, after the Sensitisation Workshop on GDP and CPI Rebasing, that the activities of pension fund administrators, alongside other previously overlooked sectors, would now be added to the rebased GDP data.

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Mr Moses Waniko, the NBS Technical Assistant on Data Analytics, had listed the sectors and areas to be included in the rebased GDP.

These include; the Pension Funds Administration, the National Health Insurance Scheme, the Nigerian Social Insurance Trust Fund, households employing domestic staff, modular refineries, Quarry and mining, and other hidden activities.

Waniko explained that these areas were not measured in the current base year, but will now be measured.

Rebased GDP will capture Illegal activities

Meanwhile, Legit.ng reported that NBS announced its intention to include illegal activities in the GDP calculation.

The NBS said in the statement that it would be done following national best practices.

It also noted that 2019 will be the new GDP base year, while 2024 will be the new base year for inflation calculations.

Source: Legit.ng