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The National Pension Commission (PenCom) has called on Pension Fund Administrators (PFAs) to accelerate diversification into alternative asset classes to enhance portfolio performance and support long-term economic development.
Speaking at a sensitisation workshop held in Lagos for Chairpersons of the Board Investment Strategy and Risk Management Committees of PFAs, PenCom’s Director-General, Omolola Oloworaran, emphasised the need for more dynamic investment approaches amidst ongoing macroeconomic volatility.
According to Oloworaran, over 80% of pension fund assets remain concentrated in fixed-income instruments, with investments in Federal Government securities alone accounting for 62% of the total N24.11 trillion pension fund assets as of May 30, 2025.
“The current macroeconomic climate—characterised by inflationary pressures, exchange rate instability, and diminishing purchasing power—demands more resilient strategies,” she said. “Alternative assets offer a complementary investment pillar, especially in areas such as infrastructure and private equity, which align with long-term liabilities and improve risk-adjusted returns.”
She highlighted that the overreliance on perceived liquidity safety has constrained PFAs from fully leveraging Nigeria’s favourable demographic and developmental potential.
Oloworaran also reiterated the fiduciary responsibilities of PFAs to Retirement Savings Account (RSA) holders, urging them to adopt a forward-looking, risk-informed strategy that aligns with the Commission’s evolving investment guidelines.
“You have a legal and ethical obligation to act in the best interest of RSA holders. This requires deliberate, well-assessed investment decisions and robust oversight mechanisms,” she said.
She encouraged PFAs to explore underutilised but permissible asset classes—including infrastructure, private equity, and sustainability-linked investments—as part of a broader shift toward real sector deployment of pension capital.
Also speaking at the forum, British Deputy High Commissioner Jonny Baxter noted that the UK government is supporting Nigeria’s transition towards long-term capital mobilisation through initiatives such as the Green Bond programme and infrastructure-focused investments.
“Nigeria’s pension industry, with over N22 trillion in assets under management, represents a significant source of long-term capital,” Baxter said. “But the concentration in traditional instruments limits impact. Sectors like infrastructure, clean energy, and logistics—supported by reform and innovation—offer viable, growth-oriented opportunities.”
The workshop, organised in collaboration with FSD Africa, convened key stakeholders across the pension ecosystem to deepen understanding of the value proposition of alternative investments.
In a similar vein, Christopher Bajowa, CEO of FCMB Pensions Limited, underscored the strategic importance of shifting toward real assets to preserve value and drive economic transformation.
“To generate inflation-adjusted returns and meaningfully contribute to national development, we must channel pension capital into infrastructure, private equity, real estate, and other long-term alternatives,” he said. “Real returns require real assets.”
Bajowa emphasised that pension funds are uniquely positioned to finance Nigeria’s infrastructure gap while maintaining prudent and secure investment practices.
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