The National Pension Commission’s (PenCom) recently issued 2025 Revised Regulation on Investment of Pension Fund Assets is drawing widespread commendation from governance advocates and capital market stakeholders, as the new framework positions pension fund investors as more deliberate and active stewards of Nigeria’s listed companies.
The revised regulation, which introduces stronger provisions on shareholder voting, engagement, transparency and accountability, is being viewed as one of the most progressive governance-focused reforms in Nigeria’s pension regulation history. Market participants say the reforms are particularly significant because pension funds control one of the country’s largest pools of long-term capital, and their influence in boardrooms is increasingly becoming a defining factor in corporate governance outcomes.
Voting Rights Now a Governance Duty
Under the revised regulation, PenCom now explicitly requires Pension Fund Administrators (PFAs) to ensure that voting rights attached to pension assets are not treated as a passive formality, but as a fiduciary responsibility tied directly to contributors’ welfare.
Specifically, the regulation states that PFAs must instruct Pension Fund Custodians (PFCs) to exercise voting rights “in a manner that is prudent, diligent, and in the best long-term interests of contributors and beneficiaries.”
This requirement effectively strengthens pension funds’ role as institutional owners, with a mandate to push for governance practices that improve long-term value, sustainability and accountability in listed companies.
Mandatory Board-Approved Voting and Engagement Policies
A key reform in the new guidelines is the requirement for PFAs to maintain a Board-approved Voting and Engagement Policy.
PenCom directs that this policy must spell out the principles for voting, escalation procedures for engagement, and safeguards for identifying and managing conflicts of interest.
The policy must also include procedures for recalling lent securities for voting on material matters, as well as an oversight framework for evaluating custodians’ voting execution.
Governance experts say this requirement represents a shift away from informal and inconsistent voting behaviour among institutional investors, toward a structured stewardship model aligned with global best practice.
Transparency Through Record-Keeping and Annual Disclosure
In another significant step, PenCom now requires voting actions to be documented, retained and made available for regulatory verification. Custodians must keep records and report details of all votes cast on behalf of PFAs.
PFAs, in turn, are required to retain proxy voting details — including the rationale for significant votes — and provide such records to PenCom upon request.
Perhaps most notably, PFAs must now disclose annually to contributors and the Commission a summary of significant votes, engagements, and outcomes achieved.
This annual disclosure obligation is expected to improve transparency and ensure pension contributors can better understand how their retirement assets are being used to influence corporate governance decisions.
New DG’s Reform Agenda Wins Praise
The release of the revised regulation under the leadership of the newly appointed Director-General has been interpreted as a signal of PenCom’s renewed commitment to strengthening governance in Nigeria’s capital market ecosystem.
Market watchers argue that the DG’s approach reflects a broader philosophy: pension funds should not merely provide capital, but should actively promote governance standards that protect contributors and improve long-term investment performance.
Strengthening Board Composition and Shareholder Alignment
Stakeholders say the revised regulation could become a catalyst for improved board composition across listed firms, as pension funds are now encouraged to engage more actively on issues such as:
• Board independence and oversight quality
• Director competence and sector experience
• Diversity, including gender representation
• Conflicts of interest and related-party exposure
• Governance transparency and disclosure quality
The new guidelines are expected to embolden pension funds to insist that boards reflect the long-term interests of shareholders, rather than short-term managerial priorities.
Institutional Investors Encouraged to Collaborate, Within Fiduciary Limits
Industry participants also note that the new stewardship framework implicitly supports more structured engagement among institutional investors, as long as such engagement does not compromise independent fiduciary decision-making.
A concept note circulating among stakeholders highlights that PenCom’s voting rules (Sections 12.1–12.6) now provide a clear foundation for collective stewardship mechanisms, including coordinated engagement, joint reporting standards and aligned voting principles, while still respecting each PFA’s autonomy.
A Turning Point for Nigeria’s Capital Markets
Analysts believe the revised PenCom regulation may deliver broader capital market benefits, including:
• Reduced governance-related investment risk
• Improved transparency and investor confidence
• Stronger risk management practices at listed companies
• Higher quality board oversight
• Better protection of pension contributors’ retirement savings
As the reforms take effect, attention will now shift to measurable outcomes — whether PFAs adopt robust voting policies, whether annual disclosures improve transparency, and whether listed companies respond by strengthening board structures and governance practices.
For now, governance advocates say the revised guidelines represent meaningful progress, and a strong signal that PenCom’s new leadership intends to deepen the role of pension funds as responsible, long-term stewards of Nigeria’s listed companies.
Oguche Aguda, former CEO of PENOP
