By Alade Adisa
Despite the favourable long-term demography of members, pension funds in Nigeria are yet to fully optimise their investment potential, the Director-General of the National Pension Commission (PenCom), Ms Omolara Oloworaran, has said.
According to her, the current economic landscape—characterised by volatility, rising inflation, and declining purchasing power of Retirement Savings Account (RSA) contributors—requires dynamic and resilient investment strategies.
Oloworaran stated this weekend while giving her opening remarks at the sensitisation workshop on investment in alternative assets for chairpersons of the Board Investment Strategy and Risk Management Committees of Pension Fund Administrators in Lagos.
She opined that pension funds could effectively leverage these opportunities to mitigate portfolio concentration risk, enhance investment returns, and achieve sustainable growth.
She said, “The overarching theme of investment in the pension industry has consistently been the preservation of capital and the generation of fair returns. However, the misperception of safety as synonymous with liquidity has limited the ability of PFAs to optimally deploy pension funds under their management. Consequently, Nigerian pension funds are yet to fully optimise their investment potential, despite the favourable long-term demography of members.
“Today, over 80% of pension fund assets are invested in fixed-income securities, with Federal Government Securities accounting for 62% of total pension assets valued at N24.11 trillion as of 30 May 2025. The allocation to alternative assets (private equity and infrastructure funds) was only about 3%.
Pencom boss speaks on traditional asset classes
Oloworaran noted that while traditional asset classes such as bonds and public equities have served their purpose, the current economic landscape, characterised by volatility, rising inflation, and declining purchasing power of RSA contributors, requires dynamic and resilient investment strategies.
“These strategies must optimally balance risk, return, and long-term sustainability, while delivering a discount rate that addresses pension inadequacy. In this context, alternative assets provide a complementary pillar to the core investment strategies of pension funds. Investments in infrastructure and private equity, in particular, help align pension fund portfolios with their investment horizon, provide opportunities for diversification of pension assets, and enhance risk-adjusted returns,” she said.
