N5.51trn Pension Funds Driving Nigeria’s Real Sector – PenCom DG

The Nigerian pension industry has significantly bolstered the nation’s real sector by allocating a substantial ₦5.51 trillion towards long-term financing initiatives. These investments span critical areas such as infrastructure, private equity, real estate, and subnational infrastructure projects, underscoring the industry’s pivotal role in economic development.

Growth in Pension Assets

The National Pension Commission (PenCom) reported a remarkable 22.65% increase in the industry’s Net Asset Value (NAV), rising from ₦18.36 trillion as of December 31, 2023, to ₦22.51 trillion by December 31, 2024. This growth is attributed to additional contributions and investment income, reflecting a robust and expanding pension sector.

Strategic Investments in the Real Sector

PenCom’s Director General, Ms. Omolola Oloworaran, highlighted that these substantial investments are strategically deployed to stimulate economic growth. During a meeting with an International Monetary Fund (IMF) delegation, she emphasized the industry’s commitment to financing key sectors of the economy, thereby promoting sustainable development.

Challenges and Future Outlook

Despite these positive strides, Ms. Oloworaran expressed concerns over the limited availability of investable instruments that meet the stringent criteria for pension fund investments. Currently, only 86 instruments qualify, highlighting a need for broader investment options. To address this, PenCom plans to collaborate with capital market operators to diversify eligible financial instruments, aiming to enhance portfolio diversification and optimize returns for pension contributors.

These developments underscore the Nigerian pension industry’s crucial role in financing the real sector, driving economic growth, and ensuring the long-term sustainability of the Contributory Pension Scheme (CPS).