The National Pension Commission (PenCom) has introduced a sweeping directive aimed at standardizing how Pension Fund Administrators (PFAs) calculate and disclose investment performance, in a bid to enhance transparency, promote long-term strategies, and reduce the risks of short-term decision-making in Nigeria’s pension industry.
The new framework, contained in a circular signed by A.M. Saleem, Head of the Commission’s Surveillance Department, took effect on July 1, 2025, and is binding on all Licensed Pension Fund Operators (PFOs).
It supersedes Sections 6.0 to 6.4 of the existing Regulation on Valuation of Pension Fund Assets.
Under the guidelines, PFAs are mandated to compute fund returns over a rolling 36-month period, converting them into an equivalent annualized rate expressed to four decimal places.
For unitised funds, this involves calculating the nth root of the ratio between the end value and beginning value of an accounting unit, while for non-unitised funds—including Approved Existing Schemes (AES), Closed Pension Fund Administrators (CPFAs), and Additional Benefit Schemes (ABS)—the Time-Weighted Return (TWR) method must be applied to ensure uniformity.
PenCom stated that all computations must be conducted monthly using the 36-month rolling interval. For example, to derive the annualized return for November 30, 2024, the accounting unit value from October 31, 2021, would be used as the starting point. Importantly, only audited and PenCom-approved values may serve as opening benchmarks in the calculations.
In addition, the circular introduces a new requirement for PFAs to report the Sharpe Ratio of each fund. The risk-adjusted performance measure will be derived using the three-year average yield of the 10-year Federal Government of Nigeria (FGN) bond as the risk-free rate, alongside the fund’s standard deviation.
To bolster accountability, PFAs are now required to publish monthly performance reports on their websites no later than the 10th day of every month.
The Commission said this measure is designed to provide contributors and stakeholders with timely and consistent access to fund performance data.
“This circular is intended to ensure transparency and encourage sustainable, long-term investment strategies by minimizing short-term decision-making,” PenCom said in the directive.
Industry analysts note that the new framework marks one of the most significant regulatory adjustments in recent years, aligning Nigeria’s pension reporting standards more closely with global best practices while seeking to strengthen confidence in the ₦18tn pension assets under management.
