Nigeria’s Pension Regulator Signals Boost For Infrastructure Investment.
The National Pension Commission (PenCom) is set to revise regulations to increase the proportion of pension funds that can be invested in infrastructure and private equity, a move aimed at enhancing returns for retirees and supporting Nigeria’s economic development. The announcement, made by PenCom spokesperson Ibrahim Buwai, comes as the commission seeks to address the challenges posed by high inflation and currency depreciation, which have eroded the real value of pension savings.
Currently, pension fund investments in infrastructure and private equity are capped at 5% of total assets, with fixed-income securities, primarily Federal Government bonds, accounting for 62% of the N24.11 trillion pension fund portfolio as of May 2025. Buwai highlighted that the existing investment strategy is underperforming due to inflation rates exceeding 20% for two consecutive years and a 70% depreciation of the naira against the US dollar. “We are not satisfied with the returns as they stand, given the significant negative impact of inflation,” he stated, adding that the new limits could be finalised before the end of September 2025.
The proposed changes will also reduce the requirement that 60% of infrastructure fund investments must be allocated to projects within Nigeria, allowing pension fund administrators (PFAs) greater flexibility to pursue higher-yield opportunities. This shift responds to calls from PFAs for more diversified investment options beyond traditional fixed-income securities, which have struggled to deliver competitive returns in the current economic climate.
PenCom’s Director-General, Omolola Oloworaran, emphasised the importance of alternative assets during a recent sensitisation workshop in Lagos. She noted that pension funds totalling N5.51 trillion have already been invested in infrastructure, private equity, real estate, and subnational initiatives, with the industry’s net asset value growing by 22.65% from N18.36 trillion in December 2023 to N22.51 trillion by December 2024. The review aims to build on this momentum, enabling PFAs to channel more funds into infrastructure projects like the Kano-Maiduguri Expressway and Nigeria Infrastructure Debt Fund, which promise stable, long-term returns.
The move is expected to bolster Nigeria’s infrastructure development, addressing a funding gap projected to reach $878 billion by 2040. By increasing allocations to infrastructure, PenCom aims to support critical projects while ensuring better financial security for retirees. The commission is collaborating with capital market operators to create new investment vehicles that balance risk and reward, fostering confidence among pension contributors.
Stakeholders have welcomed the proposed reforms, with the Pension Fund Operators Association of Nigeria (PenOp) noting that investments in infrastructure bonds rose by 14% to N103.86 billion in the first half of 2024. As Nigeria navigates economic challenges, the strategic shift towards alternative assets is seen as a vital step to drive growth, enhance pension returns, and bridge the nation’s infrastructure deficit.
