Nigeria’s pension industry recorded an impressive growth of N4.16 trillion in 2024, pushing total pension assets to a historic high of N22.51 trillion from N18.36 trillion in the previous year.
This increase marks a 22.65% year-on-year increase, according to the unaudited pension fund portfolio report released by the National Pension Commission (PenCom).
In addition to the asset growth, the total number of Retirement Savings Account (RSA) registrations reached 10.58 million by the end of December 2024, representing a 3.84% increase, equivalent to 390,899 new registrants within the year.
Portfolio allocation – fixed income dominates
Fixed income allocation: Fixed income instruments maintained a dominant position in pension fund allocations, with investments totaling N18.85tn, accounting for 83.72% of the entire portfolio. The preference for fixed income securities is driven by their tax-exempt status and lower risk profile. Pension Fund Administrators (PFAs) particularly favored federal government securities due to their relative safety.
Meanwhile, investments in commercial paper, a money market instrument, recorded a sharp decline of 38.67% to N161.16 billion from N262.79 billion in 2023. The drop followed the suspension of commercial paper investments in October 2024 due to unclear regulations for non-bank capital market operators.
- Federal government securities – N14.11 trillion (62.70% of total pension fund)
- State government securities – N250.86 billion (1.11%)
- Supra-national bonds – N20.77 billion (0.09%)
- Corporate debt securities – N2.25 trillion (9.98%)
- Money market instruments – N2.22 trillion (9.84%)
Equities allocation: Total investments in equities stood at N2.66 trillion, representing 11.81% of total pension assets in 2024. This includes allocations to foreign equities under Closed Pension Funds Administrators (CPFAs), which were allowed to continue operations following the introduction of the Contributory Pension Scheme (CPS) in 2004.
- Domestic ordinary shares – N2.24 trillion (9.96%)
- Foreign ordinary shares – N267.99 billion (1.19%)
- Private equities – N147.86 billion (0.66%)
Other investment allocation: Pension fund administrators diversified their portfolio to mitigate risks, making allocations in mutual funds, infrastructure, and real estate.
- Mutual Funds – N80.72 billion (0.36%)
- Infrastructure Funds – N214.33 billion (0.95%)
- Real Estate – N283.62 billion (1.26%)
Fund breakdown- Fund II leads with over N9trn
- Fund II maintained dominance with N9.24 trillion, accounting for 41.02% of total pension assets. This fund serves as the default for contributors under 49 years, allowing for riskier investments with higher return potential in equities, real estate, and infrastructure funds.
- Fund III followed with N5.92 trillion in total assets, while Fund V recorded the lowest at N731.4 million.
- Fund VI (Retiree Fund) stood at N10.48 billion, adopting a more conservative strategy focused on capital preservation.
Key developments in the pension industry
- Commercial paper suspension lifted
PenCom lifted its suspension on commercial paper investments by Licensed Pension Fund Administrators (LPFAs) where non-bank capital market operators act as Issuing and Paying Agents (IPAs). This follows regulatory interventions by the Securities and Exchange Commission (SEC) to address concerns.
- BVN requirement for RSAs
Effective from February 1, 2025, PenCom has mandated the use of Bank Verification Numbers (BVN) for RSA registration and data recapture. This move aims to enhance security and integrity within the pension database.
- New leadership at PenCom
Omolola Oloworaran was appointed as acting Director-General in 2024, in line with Section 26 (1) of the Pension Reform Act 2014. Despite assuming office without Senate confirmation, Oloworaran has committed to sustaining pension asset growth, expanding CPS membership, and promoting coverage initiatives.
