The Nigeria pension industry recorded a remarkable increase in 2024, with a total pension asset reaching an unprecedented increase of 22.51 billion Nairas, marking an impressive increase of 22.65% in annual sliding compared to 18 , 36 Billions of Nairas in 2023.
This growth, as revealed by the National Pension Commission (PENCOM) in its portfolio of pension funds not audited, would be a reflection of the evolution of the investment climate and also an evolving regulatory framework which continues to shape the industry trajectory.
The expansion was accompanied by a regular increase in recordings of the retirement savings account (RSA), which reached 10.58 million by the end of December 2024. This growth of 3.84%, adding 390 899 new registrants in the year, indicates an increasing participation in the contributory pension plan (CPS) in the midst of increasing awareness and regulatory application.
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Supreme fixed income reign
A deep dive into the composition of the pension industry portfolio reveals a strong inclination to fixed income investments, which represented 83.72% of the total pension assets, amounting to 18.85 Billions of Nairas. The preference for fixed income securities, in particular the instruments of the federal government, is widely attributed to their status of tax exemption and to their low -risk call.
Among the remarkable components of this asset class, the titles of the federal government dominated with an N14.11 Billion de Nairas, representing 62.70% of the Total Pension Fund. However, state government titles remained a marginal allowance at 250.86 billion nairas, a modest part of 1.11%. Business debt securities held their land with 2.25 Billions from Nairas, representing almost 10% of the portfolio.
However, all fixed income instruments have not experienced any gains. Commercial paper investments experienced a spectacular collapse, falling from 38.67% of N262.79 billion in 2023 to 161.16 billion Nairas in 2024. The decline followed the suspension of Pencom in October 2024 of investment in paper Commercial due to regulatory uncertainties for operators of the non -banking capital market. This restriction was finally lifted after the Securities and Exchange Commission (SEC) intervened to clarify the investment directives.
Alternative actions and investments are gaining ground
Actions remained an increasing asset class within the investment mixture of the pension industry, with total actions worth 2.66 Billions of Nairas, representing 11.81% of the total assets of pension. Internal ordinary actions represented the majority of it to 2.24 Billions of Nairas, while foreign actions amounted to 267.99 billion nairas. In particular, investment in investment, although relatively small, reached 147.86 billion nairas, highlighting a strategic change towards diversified and high opportunities.
Beyond the traditional asset classes, the administrators of retirement funds explored alternative investments, channeling funds in infrastructure, real estate and common funds to diversify risks. Infrastructure funds increased to 214.33 billion Nairas, while real estate investments reached 283.62 billion Nairas, strengthening industry’s commitment to expand its asset base.
Fund II maintains lead in the allocation of pension assets
When ventilated by the type of fund, Fund II continued to dominate with 9.24 Billions of Nairas, which represents 41.02% of the total pension assets. Fund II serves as a default allowance for contributors under the age of 49, allowing exposure to stocks, infrastructure and other long -term investments with higher risks. Fund III followed with 5.92 Billions of Nairas, while Fund V had the smallest allowance at 731.4 million Nairas.
Meanwhile, the retiree fund (Fund VI), which adopts a more conservative investment approach focused on capital preservation, amounted to 10.48 billion nairas.
Regulatory reforms and industry leadership changes
The expansion of the pension industry in 2024 coincided with significant political changes and changes in leadership within Pencom. In particular, the Commission has restored investments in commercial paper after responding to concerns about the involvement of non -banking capital market operators.
In addition, a major regulatory change will take effect on February 1, 2025, requiring the compulsory use of banking verification numbers (BVN) for RSA registration and data reuptake. This policy aims to improve the security and integrity of the retirement database, reducing fraud and duplication of identity in the system.
The endangerment of the industry landscape was the appointment of Omolala Oloworaran as an acting general manager of Penom in 2024. Although she assumed the office without confirmation of the Senate, Oloworaran undertook to maintain Industry growth trajectory, to extend CPS members and improve pensions coverage across the country of the country.
With the evolution of regulatory reforms and investment strategies, the sector seems ready for a new expansion. However, the maintenance of this growth, which, according to observers, depends on the ability to balance risks and ensure compliance, is one of the largest challenges the sector is confronted.
