Pension Fund Administrators (PFAs) have channeled nearly N17.1 trillion in Nigerian retirement savings into Federal Government (FG) paper. This figure accounts for 58.07 percent of the pension sector’s total N29.5 trillion Net Asset Value (NAV) during the initial quarter of 2026.
The National Pension Commission (PenCom) has cautioned that such allocations might struggle to yield inflation-beating returns over an extended period.
This warning comes amid the ongoing concentration of retirement holdings in FG fixed-income instruments, driven by elevated yields in the money market.
The regulator emphasized that while government paper remains a primary investment avenue for retirement funds, its capacity to generate returns that consistently beat inflation over time remains limited.
PenCom stated: “With 58.07% of pension assets invested in Federal Government securities, greater diversification is needed to support stronger long-term risk-adjusted returns. The Commission will continue to supervise PFAs to ensure prudent, compliant management of pension assets in the best interests of members.”
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The agency highlighted that the pension framework must be financially robust, broadly diversified, and resilient against economic shocks to fulfill its commitments to contributors over the long run.
The report stated: “The FGN allocation continues to preserve capital and generate stable carry, but it also caps the ability of the system to deliver inflation-beating returns over the long horizon.
“Movement in the alternatives allocation, up 47.84% in mutual funds and 8.76% in private equity within the quarter, is early evidence that the revised investment guidelines are beginning to influence portfolio construction.
‘‘The Commission expects this trend to accelerate as PFAs recalibrate strategies during Q2 and Q3 under the addendum to the Regulations on Investment of Pension Fund Assets issued in December 2025.”
PenCom noted that the composition of the pension portfolio in the first quarter reflects an industry that continues to anchor its stability around sovereign investment options, while cautiously testing a broader selection of financial instruments.
“Federal Government securities, in aggregate, account for 58.07% of NAV, a modest reduction on the 59.50% seen at year-end. Domestic equities have expanded from 14.41% to 18.50% on the strength of the equity rally.
‘‘Alternative asset classes now stand at 3.95% and include a materially stronger allocation to mutual funds, private equity, real estate and REITs.”
