PenCom Moves to Hedge N24 Trillion Pension Funds from Inflation, Tells PFAs What to Invest In

• Nigerian workers make monthly contributions to their pension funds under the management of an administrator, in the hopes of security in their retirement years
• However, the loss of purchasing power over the last decade has raised serious concerns about the reality of their expectations
• The pension industry regulator, PenCom, is now taking steps to address the situation and give retirees better payouts in their inactive years

Ruth Okwumbu-Imafidon, a journalist with Legit.ng, has over a decade of experience in business reporting across digital and mainstream media.

With the constantly rising inflation and naira depreciation, Nigerian workers are having to deal with the reality that their retirement savings may not be able to provide them security in their retirement years.

To deal with this issue, the National Pension Commission (PenCom) has urged the Pension Fund Administrators (PFAs) to actively explore assets and investment strategies that optimally balance risks, while guaranteeing good returns and long-term sustainability.

The PenCom Director-General, Ms. Omolola Oloworaran, stated this while speaking at a sensitisation workshop on “Investment in Alternative Assets” organised for Chairpersons of Board Investment Strategy and Risk Management Committees of Pension Fund Administrators (PFAs).

Oloworaran observed that Nigeria’s current economic landscape is causing a steady decline in the purchasing power of the Retirement Savings Account (RSA) contributors.

She called for a dynamic and resilient investment strategy among the administrators to protect the pension assets and ensure pension adequacy.

PenCom urges PFA to hedge against inflation

The PenCom DG noted that out of the total pension asset of N24.11 trillion as of May 30, 2025, about 62% were invested in Federal Government Securities.

Another 18% was invested in other fixed-income securities, while alternative assets like infrastructure funds and private equity 80% only got 3% of the total pool.

She called for more investment in alternative assets, noting that they provide a complementary pillar to the core investment strategies of pension funds and provide for a safe diversification of pension assets with improved risk-adjusted returns.

According to The Nation news, the workshop was put together to offer PFAs practical insights into the benefits of alternative assets and how they can leverage them to diversify pension portfolios and achieve sustainable growth.

This, according to the PenCom boss, is in line with the investment theme of the pension industry to preserve capital and generate fair returns.

Oloworaran urged the PFAs to optimally deploy the pension funds and optimise the full investment potential, and directly addressed the Chairpersons of the Investment Strategy and Risk Committees:

“You have a fiduciary duty, which is a legal and ethical obligation to act in the best interests of Retirement Savings Account holders at all times. This responsibility includes ensuring that investment decisions are based on sound strategy, robust risk assessments, and are compliant with the guidelines issued by the Commission.

“Fiduciary responsibility also means independence of thought. It means resisting undue influence, asking hard questions, and insisting on transparency. It requires that every investment decision is not only justifiable on paper but also defensible in principle.”

PenCom urges employers to comply with remittance

Meanwhile, PenCom has issued a final warning to employers and organisations to comply with the provisions of the 2014 Pension Reform Act.

The commission noted that non-compliant firms would be blacklisted after the expiration of the deadline.

PenCom has also granted Pension Funds Administrators full authority to process and approve retirement benefits.

The new rules eliminate the need for prior approval from PenCom when workers need to access retirement benefits.

PenCom increases monthly payouts for pensioners

In related news, PenCom has taken a major step to ensure that pensioners get financial security in their retirement.

Legit.ng reported that the commission significantly increased monthly payouts by up to 43%.

The increase takes the total monthly payouts from N8.3 billion to N11.9 billion, with over 200,000 retirees to benefit.

Source: Legit.ng