The National Pension Commission (PenCom) has urged Pension Fund Administrators (PFAs) in Nigeria to shift away from traditional investment patterns and increase exposure to alternative assets to boost returns, hedge against inflation, and contribute meaningfully to national development.
This call was made by PenCom’s Director-General, Omolola Oloworaran, during a sensitisation workshop held in Lagos for Chairpersons of the Board Investment Strategy and Risk Management Committees of PFAs.
Oloworaran emphasized that Nigeria’s pension industry, which recorded N24.11 trillion in total assets as of May 30, 2025, remains largely concentrated in fixed-income instruments—particularly Federal Government securities, which alone account for 62% of total pension fund assets.
“Over 80% of pension assets are locked into fixed-income instruments. While these are considered safe, they limit our ability to optimise returns in a highly dynamic macroeconomic environment,” Oloworaran said.
Highlighting the realities of foreign exchange volatility, high inflation, and declining purchasing power, the PenCom boss warned that sticking to conventional assets may not meet the future obligations of retirees.
“In this context, alternative investments in infrastructure, private equity, and sustainable assets are no longer optional. They provide portfolio diversification, align with the long-term investment horizon of pension funds, and offer enhanced risk-adjusted returns,” she added.
She noted that PFAs’ perception of liquidity and safety in fixed-income investments has limited innovation and diversification. Oloworaran reminded the PFAs of their fiduciary duty to Retirement Savings Account (RSA) holders to act in their best interest by adopting forward-looking and compliant investment strategies.
“You have a legal and ethical obligation to ensure that investment decisions are driven by robust strategy, sound risk assessment, and alignment with PenCom’s evolving guidelines,” she stated.
Also speaking at the event, British Deputy High Commissioner Jonny Baxter applauded Nigeria’s pension sector as a “remarkable success story” but noted that much of the capital is trapped in traditional instruments.
“With over N22 trillion in pension assets, there’s a huge opportunity to mobilize long-term capital into sectors like clean energy, logistics, and infrastructure, which are currently gaining traction due to reforms and innovation,” Baxter said.
He reaffirmed the UK’s support for Nigeria’s capital mobilisation journey, especially through initiatives such as the green bond programme and catalytic infrastructure investment partnerships.
The event, organized in collaboration with FSD Africa, brought together pension industry leaders and capital market experts to explore ways to unlock alternative asset classes.
Christopher Bajowa, CEO of FCMB Pensions Limited, stressed the urgency of repositioning pension funds to focus on real asset investments.
“If we want inflation-plus returns and value preservation, PFAs must begin to channel funds into infrastructure, private equity, and real estate,” Bajowa said. “These sectors are critical for economic transformation and align with the long-term nature of pension funds.”
He emphasized that investing in alternative assets would not only generate higher returns for RSA holders but also support national development goals, including infrastructure financing and economic diversification.
PenCom’s new thrust comes amid broader reforms in Nigeria’s financial ecosystem and rising concerns about ensuring that pension funds remain viable, resilient, and growth-focused. By promoting alternative investments, the regulator aims to reduce the overconcentration of funds in government instruments and stimulate economic activity through targeted long-term funding.
With the right mix of regulatory support, stakeholder collaboration, and policy implementation, experts believe that Nigeria’s pension industry could emerge as a catalyst for financing key sectors of the economy, from energy to transport to housing.