The National Pension Commission (PenCom) is set to raise the investment limits for Pension Fund Administrators (PFAs) in infrastructure and private equity, a strategic move aimed at enhancing returns for retirement savings amid Nigeria’s rising inflation.
PenCom spokesperson Ibrahim Buwai confirmed the development, noting that the review is expected to be implemented by the end of the third quarter of 2025.
“We are reviewing the share of funds that can be invested in infrastructure and private equity. The move is to boost returns on retirement savings,” Buwai said.
Currently, PFAs are limited to investing only 5% of pension funds in alternative assets.
The proposed review will allow greater flexibility, enabling PFAs to diversify beyond traditional fixed-income securities, which currently make up 62% of pension assets valued at N24.11 trillion as of May 30, 2025.
Alternative assets, including infrastructure and private equity, account for only about 3% of total pension fund allocations, highlighting the need for diversification to optimize returns.
Rising inflation has prompted PenCom to seek alternative investment strategies that can protect the value of retirement savings.
Director-General of PenCom, Ms. Omolola Oloworaran, emphasized during a sensitization workshop in Lagos that dynamic and resilient investment strategies are essential in the current economic landscape.
“While traditional asset classes such as bonds and public equities have served their purpose, the current economic environment, characterized by volatility, rising inflation, and declining purchasing power of RSA contributors, requires more resilient investment approaches,” Oloworaran said.
The workshop, organized in partnership with FSDA-Africa, targeted chairpersons of Board Investment Strategy and Risk Management Committees of PFAs, providing guidance on investing in alternative assets to mitigate concentration risk and enhance risk-adjusted returns.
Alternative assets, particularly infrastructure and private equity, offer long-term growth potential and align with the investment horizon of pension funds.
Oloworaran highlighted that these asset classes can provide stable, inflation-adjusted returns while contributing to national development.
“Investments in infrastructure and private equity help align pension fund portfolios with long-term liabilities, diversify pension assets, and enhance risk-adjusted returns,” she noted.
“Committees must ensure every investment decision is justifiable, transparent, and aligned with the best interests of Retirement Savings Account holders.”
She stressed the importance of fiduciary responsibility, calling on committee members to maintain independence of thought, insist on transparency, and continuously evaluate the alignment of investment strategies with long-term objectives.
According to Oloworaran, Nigeria’s pension industry must adapt to a global financial landscape characterized by market volatility, geopolitical uncertainties, and evolving asset classes.
“It is no longer sufficient to rely solely on traditional investments. Portfolio diversification into permissible but less correlated assets such as infrastructure, private equity, and sustainable investments is crucial for long-term growth,” she said.
The review of investment limits aims to empower PFAs to take advantage of untapped opportunities, enhance pension fund resilience, and ensure sustainable growth.
It also aligns with PenCom’s overarching goal of preserving capital while generating fair returns for pension contributors.
Pension fund managers have long sought greater flexibility to invest beyond fixed-income securities.
By increasing the allocation to infrastructure and private equity, PenCom is responding to industry calls for a more dynamic approach that balances safety, liquidity, and higher yields.
Oloworaran emphasized that the move will allow pension funds to contribute meaningfully to national infrastructure development and support private-sector-led economic growth while securing the retirement futures of millions of Nigerians.
The potential shift in investment strategy comes at a critical time when Nigeria faces economic volatility, rising inflation, and pressure on returns from traditional assets.
By leveraging alternative investments, PenCom seeks to strengthen the pension industry’s capacity to deliver sustainable, long-term returns while supporting national development priorities.
As Nigeria continues to modernize its pension framework, this strategic adjustment is expected to reshape the investment landscape, offering PFAs the tools to generate higher yields and enhance the financial security of contributors.