The most recent data from the National Pension Commission (PenCom) reveals that the total Assets Under Management (AUM) of the regulated pension industry increased by 30% year-on-year (YoY) to N31.3trn. The sustained growth reflects a combination of continued pension contributions, increasing enrolment levels, and strong investment performance across major asset classes. Fixed-income securities remain the primary driver of investment income, with the pension industry serving as a key participant in the domestic debt market and providing significant support for liquidity and demand.
- FGN securities continue to constitute the largest share of pension fund portfolios, accounting for 56% of total AUM.
- However, this percentage represents a decline from 62% the previous year, highlighting the gradual diversification of pension assets into other asset classes as fund managers seek to optimise risk-adjusted returns.
- At the forefront of the industry’s diversification strategy has been the increased allocation to equities, supported by regulatory changes that expanded the permissible investment limits for the asset class.
- Reflecting this shift, pension fund holdings in equities more than doubled, rising by 136% YoY to N6.5trn from N2.5trn in May ’2025.
- Consequently, equities’ share of total pension assets increased to 21%, up from 11% in the previous year, highlighting a growing appetite for higher-return assets.
- This diversification trend has been further supported by the strong performance of the Nigerian equities market, which has enhanced the attractiveness of equity investments and encouraged greater allocation to the asset class by pension fund managers.
- However, PFAs’ investments in corporate debt securities declined marginally by 1% YoY to N2.3trn, representing a relatively modest share of 7% of total pension assets.
- The decline reflects subdued corporate issuance activity amid the prolonged high-interest-rate environment, which has elevated borrowing costs and discouraged issuers’ participation in the debt capital market.
- Looking ahead, Quest MB’s analysts expect pension assets to maintain their upward trajectory, supported by sustained enrolment growth driven by ongoing pension policies, as well as strong investment income that should continue to underpin portfolio expansion (see chart below)
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