By Darasimi Kikelomo
The National Pension Commission (PenCom) is set to raise the ceiling on the proportion of pension funds that Pension Fund Administrators (PFAs) can invest in infrastructure and private equity, in a move aimed at protecting retirement savings from the adverse impact of inflation.
The proposed review, expected to take effect before the end of the third quarter, will significantly increase the percentage of funds currently allowed for alternative assets, which is capped at five percent.
Confirming the development, PenCom spokesperson Ibrahim Buwai told reporters today Tuesday that the measure is designed to improve returns for Retirement Savings Account (RSA) holders.
“We are reviewing the share of funds that can be invested in infrastructure and private equity. The move is to boost returns on retirement savings. We are in the final stages of reviewing the limit on pension fund investments in the aforementioned asset classes, currently capped at five per cent. We are not really okay with returns the way they are because inflation is having significant negative impact,” Buwai said.
According to him, the revised limit will also ease a rule that requires PFAs to invest at least 60 percent of their infrastructure fund portfolios in projects domiciled in Nigeria, a condition fund managers say has constrained diversification.
Pension fund managers have long called for greater flexibility to invest beyond fixed-income securities, which currently dominate the asset mix. As of May 30, 2025, more than 80 percent of total pension assets, valued at ₦24.11 trillion, were in fixed-income securities, with Federal Government bonds alone accounting for 62 percent. Meanwhile, allocations to infrastructure and private equity funds stood at just about three percent.
This heavy concentration in government debt instruments has raised concerns within PenCom about imbalances in pension fund investments, particularly as inflation continues to erode real returns.
PenCom’s Director-General, Omolola Oloworaran, had hinted at the shift earlier in June during a sensitisation workshop in Lagos for board investment and risk management committees of PFAs. She stressed the need for more dynamic strategies in today’s economic climate.
“While traditional asset classes such as bonds and public equities have served their purpose, the current economic landscape , characterised by volatility, rising inflation, and declining purchasing power of RSA contributors , requires dynamic and resilient investment strategies,” Oloworaran said.
Industry analysts expect the new investment window to open opportunities for PFAs to channel funds into long-term infrastructure and growth-oriented projects, potentially offering better yields and strengthening Nigeria’s pension system against macroeconomic shocks.
