…As PenCom Raises Concern Over Implications For Inflation Rate
Latest data from the National Pension Commission (PenCom) indicated that the Federal Government had borrowed about N17.1 trillion from Nigerian pension funds, representing 58.07 per cent of the N29.5 trillion pension industry’s Net Asset Value (NAV) as at the end of the first quarter this year.
The high rate of borrowing of the pension assets by the government from the Pension Funds Administrators (PFAs) through securities following the high yielding interest in the money market has raised serious concern by the PenCom, which warned that such investments may undermine the current efforts to moderate the nation’s headline inflation rate in the long term.
Specifically, the Commission pointed out that while FG securities remained a major investment avenue for pension funds, the PFAs capacity to generate returns that consistently outperform inflation over the long term remained limited.
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The PenCom stated: “With 58.07% of pension assets invested in Federal Government securities, greater diversification is needed to support stronger long-term risk-adjusted returns. The Commission will continue to supervise PFAs to ensure prudent, compliant management of pension assets in the best interests of members.”
According to the commission, to deliver on its promise to pensioners and others,the pension system must be financially sound, well diversified, and resilient to economic shocks.
The commission further clarified: “The FGN allocation continues to preserve capital and generate stable carry, but it also caps the ability of the system to deliver inflation-beating returns over the long horizon.
“Movement in the alternatives allocation, up 47.84% in mutual funds and 8.76% in private equity within the quarter, is early evidence that the revised investment guidelines are beginning to influence portfolio construction.
‘‘The Commission expects this trend to accelerate as PFAs recalibrate strategies during Q2 and Q3 under the addendum to the Regulations on Investment of Pension Fund Assets issued in December 2025.
“Federal Government securities, in aggregate, account for 58.07% of NAV, a modest reduction on the 59.50% seen at year-end. Domestic equities have expanded from 14.41% to 18.50% on the strength of the equity rally.
‘‘Alternative asset classes now stand at 3.95% and include a materially stronger allocation to mutual funds, private equity, real estate and REITs”, it added.
The regulatory commission noted that the composition of the pension portfolio in the first quarter reflected an industry that continues to build its resilience around government investment window, and that has now begun, albeit tentatively, to test the wider debt instrument space for returns.
