Pension assets rise by N1.39trn in February, highest ever growth

Nigeria’s pension assets climbed to N29.43 trillion in February, delivering a N1.39 trillion month-on-month surge, the strongest expansion in the more than two decades since the Contributory Pension Scheme was introduced.

The jump eclipses the previous high set in January 2024, when assets rose by N1.18 trillion, underscoring a new phase of rapid, market-driven growth in the industry.

Data from the National Pension Commission (PenCom) show the increase from N28.04 trillion in January 2026 was driven by inflows and market valuation gains, with equities playing a central role in the expansion.

Domestic stock holdings climbed to N5.41 trillion, highlighting pension funds’ growing exposure to the Nigerian market. Foreign equities, by contrast, remained limited at N261.99 billion, reflecting a continued home bias among fund managers amid global uncertainty.

Omolola Oloworaran, director-general of PenCom speaking at the 2nd Pension Industry Leadership Council (PILC) meeting last week in Lagos said pension funds now account for about N4 trillion in equities, equivalent to roughly 3 percent to 4 percent of total market capitalisation on the Nigerian Exchange Limited.

She noted that the industry will continue to support long-term savings and infrastructure financing.

Despite the increasing allocation to equities, pension portfolios remain dominated by government securities. Investments in Federal Government instruments rose to N16.93 trillion, accounting for more than half of total assets. Holdings are concentrated in held-to-maturity FGN bonds at N13.17 trillion, alongside available-for-sale bonds of N2.64 trillion and treasury bills at N987.03 billion, reflecting a preference for stable, predictable returns.

Exposure to alternative government-backed instruments such as Sukuk, green bonds and agency securities remains relatively small, indicating that diversification is progressing gradually.

Allocations to non-sovereign debt also expanded, with corporate debt securities reaching N2.25 trillion and state government bonds at N368.99 billion. The tilt toward held-to-maturity corporate bonds signals a long-term investment approach and selective risk-taking.

Liquidity levels remained strong, with money market instruments rising to N2.74 trillion. Fixed deposits and bank acceptances accounted for N2.50 trillion, while commercial paper stood at N209.23 billion, providing flexibility for benefit payments and portfolio rebalancing.

Alternative assets continued to lag behind, with infrastructure funds at N300.02 billion, private equity at N258.31 billion, real estate at N169.52 billion, and REITs at N77.64 billion. The relatively low allocation reflects structural constraints, including limited investable opportunities and regulatory considerations, even as these assets are seen as critical for long-term growth.

By fund category, RSA Fund IV remained the largest contributor to asset growth, with N12.67 trillion in assets and the biggest share of the monthly increase, reflecting its concentration of active contributors. RSA Fund II also maintained a significant share of total assets.

On participation, total Retirement Savings Account membership rose to 11.13 million, indicating steady growth under the Contributory Pension Scheme. Expansion, however, continues to be driven largely by the formal sector, with informal sector penetration still limited.

PenCom said it is intensifying efforts to broaden coverage through the Personal Pension Plan. Oloworaran said the commission is rolling out nationwide engagement initiatives aimed at boosting participation across regions.

The February data highlights a pension industry that is expanding steadily but remains structurally conservative, with strong reliance on government securities and only gradual diversification. Further growth in returns will likely depend on deeper capital markets, increased availability of alternative assets, and regulatory support for broader investment strategies. (BusinessDay)