Key points
- Pension consultants want Nigeria to expand investable assets as pension funds grow to N31.48 trillion.
- They recommend greater investment in infrastructure, REITs, agriculture, private equity and green finance.
- Experts urged PenCom to expand pension coverage among informal sector workers through digital platforms and targeted incentives.
- Analysts project pension assets could rise to between N45 trillion and N50 trillion within five years if current reforms are sustained.
Main story
Pension consultants have called for the deepening of Nigeria’s capital market through the creation of more investable instruments to sustain the rapid growth of pension assets beyond the current N31.48 trillion.
The experts said a broader and more liquid capital market would provide Pension Fund Administrators (PFAs) with wider investment opportunities, improve long-term returns for contributors and channel more long-term capital into economic development.
Their recommendations followed the recent disclosure by the Director-General of the National Pension Commission (PenCom) that assets under the Contributory Pension Scheme (CPS) had grown by 51 per cent over the past two years, rising from N20.79 trillion in July 2024 to N31.48 trillion in July 2026.
Pension consultant, Dr Babatunde Raimi, said Nigeria must strengthen its domestic capital market to accommodate the expanding size of pension assets.
He said the government should introduce more investable instruments capable of absorbing long-term pension funds, noting that deep capital markets improve liquidity, enhance returns and strengthen the ability of pension assets to finance national development.
Raimi also called for greater diversification of pension investments into infrastructure, agriculture value chains, Real Estate Investment Trusts (REITs), venture capital, private equity, green finance and digital economy projects to reduce dependence on government securities while improving long-term risk-adjusted returns.
He urged PenCom to expand the Personal Pension Plan by partnering with fintech companies, mobile money operators, cooperatives, trade unions and professional associations to increase participation, particularly among informal sector workers.
According to him, pension registration should be simplified through the use of Bank Verification Numbers (BVN), National Identity Numbers (NIN) and mobile technology, while contributors should be allowed flexible daily, weekly or monthly payment options.
Raimi also advocated technology-driven enforcement of pension remittances through payroll integration, tax databases, Corporate Affairs Commission records, NIN verification and Artificial Intelligence-based compliance monitoring.
He said stronger financial literacy programmes were needed because many workers still viewed pension contributions as deductions rather than long-term investments.
The consultant recommended introducing pension education during NYSC orientation, university programmes, civil service induction and corporate onboarding, alongside tax incentives to encourage voluntary pension contributions.
Looking ahead, Raimi projected that pension assets could grow to between N45 trillion and N50 trillion within the next three to five years if sustained contributions, moderate investment returns, stronger compliance and macroeconomic stability were maintained.
He added that technologies such as artificial intelligence, blockchain and automation would improve customer onboarding, compliance, fraud prevention and investment reporting across the industry.
He also urged the Federal Government to maintain macroeconomic stability, curb inflation, strengthen fiscal discipline, expand formal employment and accelerate infrastructure projects capable of attracting long-term pension investments.
Another pension consultant, Mr Ehimeme Ohioma, said increasing pension participation among informal sector workers would require targeted incentives to build confidence in the scheme.
He cited Rwanda’s experience, where government matched pension contributions for an initial period before gradually withdrawing the incentives after contributors gained confidence in the system.
Ohioma also recommended allocating at least 10 per cent of pension assets to foreign currency-denominated investments to improve portfolio diversification.
He further called for stronger enforcement of pension regulations, risk-based supervision of pension operators and prompt payment of pension obligations by governments and employers.
According to him, the recent increase in pension assets reflected consistent pension contributions, strong investment performance and faster settlement of accrued retirement benefits by the current administration.
He added that PenCom’s technology-driven initiatives to improve compliance, widen coverage and encourage more states to adopt the Contributory Pension Scheme would help sustain growth in the sector.
The issues
Nigeria’s pension industry is expanding rapidly, but investment opportunities have not kept pace with the growth in assets. Deepening the capital market and broadening investment options will be essential to maintaining strong returns while using pension savings to finance infrastructure, productive sectors and long-term economic growth.
What’s being said
“Government should create more investable instruments to strengthen domestic capital markets and in turn boost pension assets.” — Dr Babatunde Raimi.
What’s next
Attention will focus on PenCom and policymakers to determine whether reforms to deepen the capital market, expand pension coverage and diversify investment opportunities are implemented to support the industry’s next phase of growth.
Bottom line
Nigeria’s pension assets are growing at a record pace, but sustaining that momentum will depend on a deeper capital market, broader investment opportunities and reforms that bring more workers, especially those in the informal sector, into the pension system.
