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Amid heightened economic volatility, rising inflation, and eroding purchasing power of Retirement Savings Account (RSA) holders, the National Pension Commission (PenCom) is moving to fortify Nigeria’s pension asset portfolio—valued at ₦24.11 trillion as of May 2025—through a shift toward more diversified and resilient investment strategies.
This was disclosed by the Director-General of PenCom, Ms. Omolola Oloworaran, during a sensitisation workshop for Chairpersons of Board Investment Strategy and Risk Management Committees of Pension Fund Administrators (PFAs), themed “Investment in Alternative Assets.”
Ms. Oloworaran noted that while over 80% of Nigeria’s pension assets are currently invested in fixed-income instruments—primarily Federal Government securities, which alone account for 62%—there is an urgent need to reduce over-concentration and better hedge against inflationary risks.
“The current economic environment demands dynamic and resilient strategies—ones that optimise risk, deliver sustainable returns, and mitigate the impact of inflation on pension contributions,” she said.
Embracing Alternatives for Long-Term Sustainability
Highlighting the potential of alternative asset classes, the PenCom DG emphasised the strategic importance of infrastructure and private equity investments, which currently constitute only about 3% of the pension asset mix.
“While traditional assets like bonds and equities have served their purpose, the present economic climate necessitates bolder diversification,” she explained.
According to Oloworaran, alternative assets align better with the long-term investment horizon of pension funds, offering diversification benefits and potentially superior risk-adjusted returns.
She stressed that the purpose of the workshop was to provide practical insight into leveraging these asset classes to enhance portfolio performance, reduce concentration risk, and secure long-term growth for RSA holders.
Upholding Fiduciary Responsibility and Strategic Oversight
In her address, Oloworaran urged committee chairpersons to embrace their fiduciary duties with diligence and independence.
“You hold a position of trust. You are legally and ethically bound to act in the best interests of RSA holders. This means making investment decisions grounded in sound strategy, rigorous risk analysis, and full compliance with PenCom’s regulatory framework,” she stated.
She added that fiduciary duty also entails resisting external pressure, demanding transparency, and continuously evaluating whether PFAs’ investment strategies align with the long-term liabilities of the pension scheme.
Building a Forward-Looking Investment Framework
Oloworaran cautioned that the perceived safety associated with liquidity has historically constrained PFAs from optimally deploying pension funds. Despite Nigeria’s favourable demographic outlook and pension sector growth, the industry has yet to fully realise its investment potential.
“It is no longer sufficient to rely solely on traditional investment models. Given growing exposure to market volatility, geopolitical risks, and the emergence of new asset classes, oversight committees must push for diversification into permissible, less correlated alternatives such as infrastructure, private equity, and sustainable investments,” she advised.
The PenCom chief concluded by reaffirming the Commission’s commitment to enabling robust, risk-aware, and sustainable investment strategies that preserve capital, deliver fair returns, and ultimately secure the retirement future of millions of Nigerians.
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