Mothercloud News

Nigeria’s pension funds industry recorded a significant growth of ₦349.25 billion in January 2025, according to an unaudited report released by the National Pension Commission (PenCom). The report, covering the industry’s portfolio for the period ending January 31, 2025, highlighted a 1.54% increase in total net asset value, reaching ₦22.86 trillion, up from ₦22.51 trillion in December 2024.

On a year-on-year basis, the pension fund industry saw a ₦3.33 trillion (17.05%) increase compared to ₦19.53 trillionrecorded in January 2024.

Breakdown of Pension Fund Investments

The report covers approved existing schemes, closed pension fund administrators (CPFAs), and retirement savings accounts (RSAs), including unremitted contributions at the Central Bank of Nigeria (CBN) and legacy funds.

The growth in pension assets is attributed to strong investment performance across various fund types, including:

• RSA Funds I – VI
• Retiree Fund VI
• Closed Pension Fund Administrators (CPFAs)

A key driver of this growth was domestic ordinary shares, which pension funds allocated ₦2.41 trillion to as of January 2025. This reflects the continued importance of local equities in pension fund investment strategies.

Asset Allocation Overview

The report provides insights into how pension funds are distributed across various asset classes:

• FGN Securities: ₦14.31 trillion (including federal government bonds and treasury bills)
• Money Market Instruments: ₦2.18 trillion
• Corporate Debt Securities: ₦2.27 trillion
• Mutual Funds: ₦93.22 billion (up from ₦80.78 billion in December 2024)

RSA Membership and Pension System Growth

The Retirement Savings Account (RSA) membership reached 10,615,028 as of January 2025, reflecting a growing contributor base to the pension system. This increase in membership further strengthens the long-term sustainability of pension fund investments.

State Governments and the Contributory Pension Scheme

To enhance the industry’s growth, PenCom has urged state governments to implement the Contributory Pension Scheme (CPS).

As of December 2024, only 11 states had commenced CPS implementation:

1. Lagos
2. Kaduna
3. Ekiti
4. Edo
5. Ondo
6. Delta
7. Benue
8. Anambra
9. Jigawa
10. Federal Capital Territory (FCT)

However, several states, including Akwa Ibom, Borno, Kwara, Plateau, Cross River, and Yobe, are yet to adopt the CPS. PenCom has encouraged these states to enact CPS laws to ensure sustainable pension administration and timely payment of retirees’ entitlements.

The Impact of the Pension Reform Act

The Pension Reform Act of 2004 transformed Nigeria’s pension system by introducing the Contributory Pension Scheme (CPS). Under this scheme, both employers and employees contribute to an individual’s retirement savings account (RSA), ensuring a more sustainable and transparent pension structure.

With the strong start in January, Nigeria’s pension industry continues to grow, reinforcing its significance in the country’s financial landscape and providing greater financial security for retirees.