Nigeria to Ease Pension Rules, Channel More Funds into Infrastructure
Nigeria is preparing major changes to pension investment guidelines to enable increased allocation of the country’s $17 billion pension assets into infrastructure and private equity—a move aimed at boosting returns and supporting economic growth.
Details reveal that the National Pension Commission (PenCom) is finalising plans to review the current 5% investment cap on alternative assets, according to spokesman Ibrahim Buwai, who hinted that the new limits could be announced before the end of the quarter.
The regulator also plans to ease a rule requiring infrastructure funds to commit at least 60% of their portfolio to Nigeria-based projects, which will allow greater diversification opportunities.
These reforms come amid pressure from pension fund managers seeking flexibility beyond traditional fixed-income securities, which currently make up 62% of assets. Persistent inflation above 20% and a 70% currency depreciation have eroded real returns.
“We are not really okay with returns the way they are because inflation is having a significant negative impact,” Buwai explained. “We really want to see traction in those alternative assets to complement returns from the fixed income and the traditional assets.”
PenCom’s Director-General, Omolola Oloworaran, recently revealed that pension funds have invested ₦5.51 trillion in infrastructure, private equity, real estate, and subnational projects, with total industry assets rising 22.65% year-on-year to ₦22.51 trillion in December 2024.
However, she flagged a major challenge: only 86 instruments currently meet regulatory standards, highlighting the need for reform to expand the investment universe.
In August, President Tinubu appointed Opeyemi Agbaje as PenCom Chairman, signalling a governance shake-up. Agbaje’s extensive experience in law, finance, consulting, and policy is expected to help drive reforms during this critical phase.
