Pension Funds Driving Economic Momentum
Nigeria’s pension industry is now a major force in the country’s economy. So far, N5.51 trillion has been invested in vital sectors like infrastructure, real estate, and private equity. These investments are focused on boosting long-term growth in the real sector.
Strong Growth in Pension Asset Value
The Director General of the National Pension Commission (PenCom), Omolola Oloworaran, shared this update on Tuesday during a meeting with the International Monetary Fund (IMF). The meeting was part of the IMF’s 2025 Article IV Consultations in Abuja. Oloworaran was represented by Abdulrahaman Muhammad Saleem, the Head of PenCom’s Surveillance Department.
According to PenCom, the industry’s Net Asset Value (NAV) rose by 22.65%. It increased from N18.36 trillion at the end of 2023 to N22.51 trillion by December 2024. This rise is mainly due to additional contributions and solid investment returns.
A Roadblock: Limited Investment Options
Despite the progress, PenCom noted a major challenge. There are only 86 financial instruments in Nigeria that meet the requirements for pension fund investment. These instruments must be both liquid and publicly tradable. This small number limits the industry’s ability to diversify portfolios and boost returns.
Although current regulations encourage wider investment options, the market has not produced enough qualifying assets. As a result, pension funds face restrictions in where they can safely invest.
PenCom’s Strategy for Broader Investment
To solve this problem, PenCom plans to partner with capital market operators. The goal is to increase the number of eligible financial products. This step will allow for better risk management and higher returns.
In addition, PenCom will promote investment in alternative asset classes. These include private equity, infrastructure, and other long-term projects. By doing so, the industry can build more balanced portfolios.
IMF Applauds Nigeria’s Pension Reforms
The IMF delegation welcomed these efforts. They praised PenCom for its strong regulation and oversight. They also noted the impressive growth in the pension sector and its role in supporting national development.
Looking ahead, PenCom says it will continue working with the Securities and Exchange Commission (SEC), the Debt Management Office (DMO), and the Pension Fund Operators Association of Nigeria (PenOp). Together, they aim to create a stronger and more sustainable pension system for the future.
