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N17trn pension funds go into FG securities, PenCom raises alarm
By Rosemary Iwunze
Pension Fund Administrators, PFAs, have pushed about N17.1 trillion from Nigerian pension monies to Federal Government, FG, securities. This amount represents 58.07 per cent of the N29.5 trillion pension industry’s Net Asset Value, NAV, in the first quarter of 2026.
The National Pension Commission, PenCom, has now warned that such investments may not deliver inflation-beating returns over the long term.
The warning comes against the continued concentration of pension assets in FG securities following the high yield environment in the money market.
The Commission cautioned that while FG securities remain a major investment avenue for pension funds, their capacity to generate returns that consistently outperform inflation over the long term remains limited.
PenCom stated: “With 58.07% of pension assets invested in Federal Government securities, greater diversification is needed to support stronger long-term risk-adjusted returns. The Commission will continue to supervise PFAs to ensure prudent, compliant management of pension assets in the best interests of members.”
PenCom noted that the pension system must be financially sound, well diversified, and resilient to economic shocks if it is to deliver on its promise to members across the long horizon.
The report stated: “The FGN allocation continues to preserve capital and generate stable carry, but it also caps the ability of the system to deliver inflation-beating returns over the long horizon.
“Movement in the alternatives allocation, up 47.84% in mutual funds and 8.76% in private equity within the quarter, is early evidence that the revised investment guidelines are beginning to influence portfolio construction.
‘‘The Commission expects this trend to accelerate as PFAs recalibrate strategies during Q2 and Q3 under the addendum to the Regulations on Investment of Pension Fund Assets issued in December 2025.”
PenCom stated that the composition of the pension portfolio in the first quarter reflects an industry that continues to build its resilience around Federal Government investment window, and that has now begun, if only tentatively, to test the wider instrument set.
“Federal Government securities, in aggregate, account for 58.07% of NAV, a modest reduction on the 59.50% seen at year-end. Domestic equities have expanded from 14.41% to 18.50% on the strength of the equity rally.
‘‘Alternative asset classes now stand at 3.95% and include a materially stronger allocation to mutual funds, private equity, real estate and REITs.”
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