The investment of pension assets in Federal Government securities has risen by 19 per cent from N11.03tn in July 2023 to N13.18tn in July 2024.
This is according to an analysis of the monthly unaudited report on the pension funds industry portfolio provided by the National Pension Commission.
As of July 2023, when the total pension fund assets stood at N17.07tn, more than half was invested in FGN securities at N11.03tn.
The latest report from PenCom indicated that about N13.18tn of the total pension assets valued at N20.87tn were allocated to FGN securities.
The Pension Fund Operators Association of Nigeria stated that the increase in investment in FGN securities year-on-year reflected “the steady returns and perceived security of FGN securities as a foundation of pension fund portfolios”.
Beyond government securities, pension funds were invested in other asset classes and a year-on-year comparison showed that there has been an increase in the allocations to those other asset classes as well.
Private equity investments grew by 70 per cent to N104.7bn in July.
“This surge underscores a keen interest in high-growth opportunities within private markets, where pension funds seek to maximize returns over the long term,” said PenOp on its social media page.
Investments in equities rose by 40 per cent over the past year to N2.16tn in July, from N1.54tn in the previous year, highlighting a strong performance in the stock market and the potential for higher returns.
Additionally, investments in corporate debt saw a 22 per cent increase, reflecting a robust demand for corporate bonds and other debt instruments that provide stable returns while managing risk.
Over the years, pension assets in Nigeria have experienced substantial growth, driven by strategic investments across various sectors.
This year marked the 20th anniversary of the implementation of the Contributory Pension Scheme in Nigeria with the signing of the 2004 Pension Reform Act.
The Contributory Pension Scheme is a mandatory scheme, backed by the Pension Reform Act 2014, which allows employees and employers in the public and private sectors to contribute a minimum of 18 per cent of an employee’s monthly emolument into his or her Retirement Savings Account.
These contributions are then invested by the PFAs with the objectives of safety and maintenance of fair returns under strict regulation by the PenCom.
According to the Regulation on Investment Of Pension Fund Assets issued by PenCom, operators in the pension space can invest funds in bonds, treasury bills, debt securities, redeemable preference shares and other debt instruments issued by corporate entities, shares of publicly listed companies, bank deposits and bank financial instruments and other asset classes, provided they meet the criteria.
