Pension assets hit N24.12trn in May as industry eyes alternative investments

Nigeria’s pension industry recorded significant growth in May 2025, with Assets Under Management (AUM) rising by N452 billion to reach N24.12 trillion, driven by steady gains across major asset classes compared to April.

Retirement Savings Account (RSA) registration also rose by 44,938 during the month, bringing the total number of enrollees to 10,763,593, up from 10,718,655 in April.

Domestic Ordinary Shares advanced by 7 per cent, buoyed by increased market participation and a moderate rebound in equities, according to analysts at the Pension Fund Operators Association of Nigeria (PenOp). The NGX All Share Index climbed 18.52 per cent in May, reflecting stronger investor sentiment and favourable market conditions, which bolstered equity allocations in pension portfolios.

Federal Government of Nigeria (FGN) securities rose by 2 per cent, maintaining their status as a safe harbour for pension assets in prevailing macroeconomic circumstances, supported by steady subscriptions to bonds and Treasury bills.

Mutual Funds gained 2.13 per cent, indicating careful yet consistent diversification by pension operators. Money Market Instruments surged by 5.96 per cent, benefiting from attractive short-term yields and active liquidity management by pension fund administrators. 

Foreign Ordinary Shares climbed 4.69 per cent, underscoring measured exposure to offshore equities as part of currency and portfolio risk management.

“Month-on-month expansion across these asset classes, coupled with strong equity performance, reflects measured optimism and adaptive strategies by pension fund managers navigating changing market conditions,” said Oguche Agudah, chief executive officer of PenOp.

The National Pension Commission (PenCom) has recently signalled its intention to diversify pension investments into alternative asset classes to achieve higher returns in the face of persistent economic volatility.

According to PenCom, while traditional instruments such as bonds and listed equities have delivered stability, today’s environment of inflationary pressure and reduced purchasing power for RSA contributors calls for more flexible and resilient approaches.

Over 80 per cent of pension assets are currently invested in fixed income securities, with FGN securities accounting for 62 per cent of the total N24.11 trillion portfolio as of 30 May 2025. Allocations to alternative assets such as private equity and infrastructure funds stand at only about 3 per cent.

Omolola Oloworaran, director-general of PenCom, speaking at a sensitisation workshop in Lagos organised in collaboration with FSDA-Africa on “Investment in Alternative Assets for Chairpersons of Board Investment Strategy and Risk Management Committees of PFAs,” explained that this shift forms part of efforts to optimise returns for contributors through more resilient and higher-yielding investments.

“Alternative assets provide a complementary pillar to the core strategies of pension funds. Investments in infrastructure and private equity, in particular, help align portfolios with long-term liabilities, enable broader diversification, and enhance risk-adjusted returns,” Oloworaran said.

Addressing the board members of PFAs, she reminded them of their fiduciary responsibilities. 

“As chairpersons of the Investment Strategy and Risk Committees, you hold positions of trust. You are legally and ethically bound to act in the best interests of RSA holders at all times. This duty demands sound strategy, robust risk assessments and strict compliance with Commission guidelines.

“Fiduciary responsibility also requires independence of judgement. It means resisting undue influence, asking probing questions and insisting on transparency. Every investment decision must be not only defensible on paper but principled in practice. You must continually examine whether your PFA’s strategies reflect a prudent balance of risk and return and match the scheme’s long-term obligations,” she added.

Oloworaran further noted that the global financial environment is becoming increasingly complex, with heightened exposure to market swings, geopolitical tensions and evolving asset classes.