Pension fund operators in Nigeria are calling for expanded regulatory guidelines to allow investments in alternative asset classes, including export-oriented businesses, toll roads, real estate, and high-growth unlisted companies. The move is aimed at boosting returns and protecting contributors’ savings amid rising inflation and currency depreciation.
According to data from the National Pension Commission (PenCom), Nigeria’s pension assets stood at N24.63 trillion as of June 2025, with the majority invested in government-backed instruments.
While these instruments provide security, experts argue that the current investment mix may not adequately safeguard real returns, particularly as inflation remains in double digits.
Oguche Agudah, CEO of the Pension Fund Operators Association of Nigeria, emphasised the need for a more diversified investment approach.
“Pension funds are looking toward alternative investments to be able to cover any potential losses,” Agudah said.
Similarly, Dave Uduanu, CEO of Access ARM Pensions, highlighted potential asset classes such as toll roads, export-oriented businesses, real estate, and high-growth unlisted companies as avenues for higher returns.
Stanbic IBTC Pension Managers CEO, Olumide Oyetan, also called for the issuance of floating-rate bonds indexed to inflation.
He noted that such instruments would protect the value of fixed-income portfolios, which constitute the largest portion of pension fund balance sheets.
“The availability of inflation-indexed securities will help operators maximise portfolio value and guard against negative real returns,” Oyetan said.
While regulatory restrictions have limited pension fund exposure to alternative assets, operators have already increased allocations to private equity, infrastructure funds, and real estate investment trusts within current guidelines.
This trend aligns with global movements, where private credit and infrastructure investment markets have expanded significantly.
PenCom has confirmed that a review of the investment guidelines is underway, with new rules expected to be released this quarter.
The Commission recently held a sensitisation workshop in Lagos for chairpersons of Board Investment Strategy and Risk Management Committees of Pension Fund Administrators (PFAs), emphasising the need for portfolio diversification and alternative asset allocation.
Omolola Oloworaran, Director-General of PenCom, stressed the importance of resilient and dynamic investment strategies.
“Alternative assets provide a complementary pillar to the core investment strategies of pension funds.
Investments in infrastructure and private equity align pension fund portfolios with their investment horizon, provide diversification, and enhance risk-adjusted returns,” she said.
Nigeria’s macroeconomic environment, characterised by an inflation rate of 21.88% as of July 2025 and significant naira depreciation, has heightened the urgency for pension funds to pursue more innovative investment strategies.
The naira has lost approximately 70% of its value against the dollar since May 2023 following foreign exchange market harmonisation, further eroding real returns on fixed-income instruments.
Analysts say that broader investment options will not only preserve the value of retirement savings but also contribute to economic growth by channeling long-term capital into infrastructure and high-growth sectors.
As PenCom finalises its revised guidelines, stakeholders in the pension industry remain hopeful that expanded investment avenues will strengthen fund performance, protect beneficiaries from inflationary pressures, and foster sustainable growth in Nigeria’s capital market.