Pension Fund Administrators (PFAs) raised their allocations to equities over the past year by 86 percent, driven by improved returns, portfolio diversification and investor confidence.
The shift marks a notable departure from the traditionally conservative asset allocation strategies dominated by fixed income, particularly FGN securities.
Data from National Pension Commission (PenCom) compiled by the Pension Fund Operators Association of Nigeria (PenOp) show that equity holdings by PFAs nearly doubled, rising by 86 percent from N1.94 trillion to N3.61 trillion between August 2024 and August 2025.
Analysts at PenOp say the reallocation was driven by a bullish equities market and renewed investor confidence in the capital market.
FGN securities, though still the dominant asset class, grew modestly by 18 percent, from N13.4 trillion to N15.82 trillion, as PFAs gradually diversified away from government instruments in search of higher returns.
Investments in money market instruments also rose by 18 percent, from N2.04 trillion to N2.4 trillion, reflecting continued interest in short-term, liquid assets.
According to Akinbola Akintola, head, Research & Investor Relations at PenOp, alternative investments showed even stronger momentum, as mutual funds expanded by 123 percent, from N101.31 billion to N226.49 billion.
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He said private equity surged by 153 percent, from N107.81 billion to N273.27 billion, while real estate grew by 27 percent, from N199.8 billion to N254.6 billion.
He said the release of PenCom’s new investment guidelines in September 2025, which increased allocation limits to certain asset classes such as equities, private equity, and real estate while reducing the ceiling for FGN securities, is expected to further strengthen this diversification trend in the coming year.
Meanwhile, between the same August 2024 and August 2025, the pension funds experienced substantial growth, driven by consistent contributions from contributors and strong returns on investments.
Fund I, the most conservative fund, saw its value increase by approximately 79 percent, rising from N217.03 billion to N389.15 billion, reflecting steady inflows and stable market performance.
Fund II grew by 25 percent, moving from N8.73 trillion to N10.9 trillion, showing healthy investor confidence and positive yields.
Fund III followed with a 23 percent increase, growing from N5.59 trillion to N6.88 trillion, while Fund IV also rose by 25 percent, increasing from N1.51 trillion to N1.89 trillion. Fund V experienced a remarkable jump of 63.5 percent, climbing from N968.27 million to N1.58 billion, indicating strong risk-adjusted returns. Fund VI recorded the highest growth rate at about 157 percent, soaring from N70.63 billion to N181.23 billion, highlighting its aggressive investment strategy and high return potential.
“This overall growth across all six-pension funds reflects the combined effect of increased contributions by pension contributors and the effective management of these funds through diversified investment portfolios. The steady rise in fund values suggests growing trust in the pension system and a positive outlook for long-term retirement savings in Nigeria,” analysts at PenOp said.
The industry’s pension asset as at the end of July 2025 has N25.79 trillion, while Retirement Savings Accounts (RSAs), which indicate the number of contributors into the pension scheme, rose to 10.83 million.
