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Pension Fund Administrators (PFAs) have channelled over N14.5 trillion of workers’ retirement savings into Federal Government securities as of March 2025, highlighting the industry’s continued reliance on sovereign debt.
Figures from the National Pension Commission (PenCom) show that investment in FG securities stood at N14.48tn in Q1 2025, accounting for 62.09 per cent of total pension assets of N23.33tn. This compares with N10.86tn in June 2023, when pension assets were valued at N16.76tn.
This indicates PFAs raised their exposure to government paper by N3.62tn within six quarters — a 33.3 per cent increase — although the proportion of sovereign debt in overall portfolios fell slightly from 64.78 per cent to 62.09 per cent.
FG bonds remained the largest component, climbing from N10.40tn to N13.79tn, while treasury bills surged 208 per cent from N192.4bn to N593.2bn. In contrast, sukuk fell 37.8 per cent to N94.8bn, agency bonds dipped 38.9 per cent to N7.4bn, and green bonds slumped 97.4 per cent to N2.5bn.
Despite the nominal growth, analysts say the continued concentration in government debt underscores the conservative stance of PFAs amid inflationary pressures and market volatility.
PenCom, in its Q1 2025 report, noted that investor appetite for government securities remained strong, supported by steady issuance and stable yields. It also highlighted the need for diversification into infrastructure, private equity, and other alternative assets.
Between June 2023 and March 2025, total pension assets expanded by N6.57tn, with FG securities absorbing more than half of the growth.
Equities recorded the sharpest rise in proportional terms, doubling from N1.27tn in 2023 to N2.57tn in 2025, pushing their share from 7.57 per cent to 11.02 per cent. Corporate debt increased to N2.35tn, though its portfolio share dropped to 10.07 per cent.
Real estate and infrastructure funds grew modestly but remain marginal, together accounting for under 3 per cent of pension assets. State government bonds contracted by 10 per cent to N249.7bn, reflecting concerns over repayment risks.
Industry experts have warned that while the pension system is safe, inflation averaging above 20 per cent continues to erode real returns. TrustFund Pensions CEO, Uche Ihechere, said pension funds are “growing in nominal terms, but not fast enough to beat inflation.”
Similarly, Bolaji Balogun, CEO of Chapel Hill Denham, stressed that pension funds need to expand into equities, infrastructure, and alternative assets to safeguard contributors’ savings.
PenCom’s Director-General, Omolola Oloworaran, recently urged PFAs to rethink their strategies, insisting that “alternative assets provide a complementary pillar to core pension fund investments” and are key to delivering sustainable long-term returns.
