Pension Fund Administrators (PFAs) in Nigeria invested N14.48 trillion of workers’ retirement savings in Federal Government securities by March 2025, accounting for 62.09% of the total N23.33 trillion pension assets, according to the National Pension Commission (PenCom). This marks a 33.3% increase from N10.86 trillion in June 2023, when government securities comprised 64.78% of the N16.76 trillion total assets, reflecting PFAs’ continued reliance on sovereign debt.
Federal Government bonds rose by 32.6% to N13.79 trillion from N10.40 trillion, though their portfolio share dropped from 62.07% to 59.1%. Treasury bills surged 208.3% to N593.2 billion from N192.4 billion, increasing their weight from 1.15% to 2.54%. Conversely, sukuk and agency bonds fell 37.8% to N94.8 billion and 38.9% to N7.4 billion, respectively, while green bonds plummeted 97.4% to N2.5 billion. PenCom attributed the strong demand for government securities to expectations of declining inflation and stable interest rates, noting that federal debt issuances have deepened market liquidity.
Total pension assets grew 39.2% by N6.57 trillion since June 2023, with government securities absorbing 55% of this growth. Despite high inflation averaging over 20%, PFAs’ conservative strategy prioritizes safety but raises concerns about long-term sustainability. Equities saw significant growth, doubling to N2.57 trillion from N1.27 trillion, boosting their share from 7.57% to 11.02%, driven by the Nigerian Exchange’s All-Share Index surpassing 105,000 points. Corporate debt grew 24.7% to N2.35 trillion, bank placements rose 27.4% to N1.76 trillion, and commercial papers increased 46.7% to N250.3 billion, though their portfolio shares slightly declined.
Alternative assets like real estate grew modestly by 19.7% to N259.1 billion but remained a small 1.11% of the portfolio, despite regulatory encouragement. The heavy tilt toward government securities underscores PFAs’ risk-averse approach in an uncertain economy, with analysts questioning whether this strategy can sustain real returns amid inflationary pressures.
