Nigeria’s pension fund assets continued their upward trajectory in April 2025, rising to N23.65 trillion, up from N23.33 trillion recorded in March, representing a 1.40% month-on-month increase, according to data from the National Pension Commission (PenCom).
This growth reflects sustained investor confidence and strategic asset reallocations across both fixed-income and alternative investment classes, despite economic headwinds.
Here’s a detailed breakdown of how the funds were deployed and the asset classes that led the expansion.
Portfolio allocation breakdown
Total allocation to Federal Government of Nigeria (FGN) Securities increased marginally by 1.76% to N14.65 trillion, accounting for 61.94% of total pension assets. The breakdown shows:
- FGN Bonds (held-to-maturity) rose by 0.53% to N12.46 trillion.
- Sukuk Bonds surged by 8.50% to N96.83 billion.
- Agency Bonds (NMRC & FMBN) also grew 8.75%.
- However, Green Bonds and Treasury Bills recorded declines of -8.19% and -3.08% respectively, highlighting some rotation away from short-term and ESG-linked government instruments.
State government securities witnessed a slight 1.12% increase to N252.53 billion, indicating a marginal appetite for sub-national debt.
Corporate debt securities fell by 1.38% to N2.32 trillion, now making up 9.79% of total pension assets. Most of the decline came from Corporate Bonds (HTM), which dropped by -4.04% to N1.47 trillion.
- Conversely, Corporate Bonds (AFS) climbed 3.05%, while Corporate Infrastructure Bonds saw a notable 16.81% uptick.
The zero investment in Corporate Green Bonds continued for a second consecutive month, pointing to a lack of depth or appetite in that segment.
Money market instruments
Total assets in money market instruments rose to N2.18 trillion from N2.08 trillion, accounting for 9.21% of pension portfolios. Notable changes include:
- Fixed Deposits grew by 4.54%.
- Commercial Papers saw a solid 10.43% increase, indicating improved corporate liquidity management.
- Foreign Money Market Instruments declined sharply by -9.86%, reflecting foreign exchange risks or reduced external exposure.
There was a sharp rise in exposure to Private Equities, which surged 40.10% to N230.18 billion, suggesting increased risk appetite and a search for higher returns.
Other notable changes:
- Mutual fund holdings jumped by 16.94% to N180.15 billion, with Open/Close-End Funds alone increasing by 24.41%.
- Real estate investments rose by 6.18% to N275.08 billion.
- REITs recorded a 7.91% uptick, hitting N75.24 billion.
- Supra-national Bonds grew by 1.90%, due to increased confidence in global institutions amid local fiscal volatility.
- On the flip side, Infrastructure Funds dropped -2.09%, while Cash & Other Assets dipped -6.44%.
Equities: Domestic vs Foreign
- Domestic Equities rose marginally by 0.10% to N2.57 trillion, reflecting the NSE’s relatively flat performance in April.
- Foreign Equities saw a more pronounced rise of 5.20%, climbing to N277.08 billion, suggesting a measured return to offshore risk assets.
Combined, equities now make up approximately 12.05% of total pension assets
Breakdown by Fund Category: Fund II remains the anchor
Fund II, the default fund for active contributors below 49 years, retained its dominance with N9.83 trillion in assets, representing a commanding 41.54% of total pension assets. This underpins its role as the backbone of the pension system.
Other noteworthy movements:
- Fund III (typically for contributors aged 50 and above) rose to N6.20 trillion, up 26.21%, reflecting steady accumulation among older RSAs.
- Fund IV (Retiree Fund) posted N1.77 trillion, a 7.46% rise, as pensioners maintain stability-focused allocations.
- Fund I, targeted at aggressive investors under 49, climbed 1.29% to N304.91 billion, suggesting modest traction in high-risk appetite.
- Fund V (Micro Pension Fund) inched up to N1.35 billion, a marginal yet crucial 0.01% foothold for informal sector coverage.
- The relatively new Fund VI (for contributors aligned with Islamic finance principles) and Fund VI Retiree stood at N134.48 billion and N12.98 billion, respectively, growing footprints amid rising demand for ethical investment instruments.
Notably, Closed Pension Fund Administrators (CPFAs) and Approved Existing Schemes (AES) held N2.61 trillion and N2.80 trillion, marking solid double-digit growth of 11.01% and 11.85%, respectively.
Takeaway
The data for April 2025 confirms a cautious but evolving investment strategy among Nigeria’s Pension Fund Administrators (PFAs). While FGN securities continue to dominate allocations, the month saw increased interest in higher-yielding assets like private equity, commercial papers, and infrastructure bonds.
The uptick in foreign equity and private markets signals that PFAs are gradually seeking returns beyond the traditional safe havens — a trend likely to continue in a high-inflation, low-interest rate environment.
