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The National Pension Commission has granted a 24-month regulatory forbearance permitting Pension Fund Administrators (PFAs) to invest in a broader range of securities issued by the parent companies of their respective Pension Fund Custodians (PFCs).
The decision was disclosed in a circular dated July 3, 2026, and signed by A.M. Saleem, Director of the Surveillance Department.
According to PenCom, the measure reflects prevailing market realities, including operational constraints and the limited availability of quality investable instruments in the domestic market.
What they are saying
The Commission said the forbearance is designed to provide PFAs with greater portfolio flexibility, expand the universe of eligible investments, and improve diversification while supporting the generation of optimal risk-adjusted returns for pension contributors.
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- “The Commission hereby extends its existing regulatory forbearance to permit Pension Fund Administrators (PFAs) to invest in a broader range of securities issued by the parent companies of their respective Pension Fund Custodians.
- “This measure would enhance portfolio flexibility and broaden the investable universe, enhance diversification, and improve PFAs’ ability to achieve optimal risk-adjusted returns in line with their fiduciary obligations,” PenCom stated.
Under the framework, only parent companies of Pension Fund Custodians that are licensed financial institutions regulated by the Central Bank of Nigeria will qualify for investment.
Eligible companies must also be publicly listed on a securities exchange recognised by the Securities and Exchange Commission and demonstrate strong financial health, including a history of profitability, dividend payments, regulatory compliance, and the absence of unresolved enforcement actions.
More insights
To manage concentration risks, PenCom introduced specific investment caps across different asset classes and pension fund categories.
For equity investments, PFAs may invest up to 3% of pension assets in the ordinary shares of a qualifying PFC parent company for Funds I, II, VI-Active and V-Growth, while exposure for Funds III, IV, VI-Retiree and V-Conservative is limited to 1%.
For corporate bonds issued by eligible parent companies, exposure is capped at 5% for higher-risk funds and 3% for conservative and retiree-focused funds.
In addition, total exposure to a PFC parent company’s equities and bonds cannot exceed 5% of a Retirement Savings Account (RSA) fund’s consolidated net asset value (NAV), while overall exposure to all securities issued by the parent company, including money market instruments, is capped at 10%.
The Commission also restricted investments in lower-rated debt instruments, limiting exposure to 20% of any “A”-rated corporate bond issue and 15% of any “BBB”-rated issue issued by a PFC parent company.
Stronger governance and disclosure requirements
PenCom said PFAs must implement enhanced governance controls before making any investment under the forbearance arrangement.
Proposed investments must undergo independent review by the Investment Committee, Risk Management Unit, and Compliance Department of the PFA, while final approval must be obtained from the board.
The Commission further directed PFAs to maintain a dedicated PFC-Party Conflict Register and submit quarterly disclosures detailing holdings in PFC parent companies, including acquisition dates, valuations, and portfolio exposure levels.
Audited financial statements must also clearly disclose all exposures to contributors.
In addition, any breach of investment limits or any material financial distress involving a parent company must be reported to PenCom within 48 hours.
The regulator stressed that all investments involving PFC-related entities must be conducted on arm’s-length terms and be subject to the same fiduciary standards that apply to all pension assets.
What you should know
The latest directive follows PenCom’s revised pension investment regulations issued earlier this year, which increased the allowable equity allocation across several Retirement Savings Account fund categories.
The changes were widely viewed as a move to provide Pension Fund Administrators with greater flexibility in asset allocation and improve long-term portfolio performance while supporting liquidity and capital formation in Nigeria’s financial markets.
