For the first time in years, pension funds administrators (PFAs) are making noticeable moves away from their traditionally heavy concentration in Federal Government securities, signaling a subtle but significant shift in portfolio strategy.
While Federal Government’s instruments still dominate, soaking up N15.75 trillion or roughly 60 per cent of all pension funds in the period under review, PenCom data for the period ended September 30, 2025 showed accelerated diversification by Pension Fund Adminstrators (PFAs) into corporate bonds, real estate, private equity and infrastructure funds.
The shift from heavy concentration in Federal Government securities was against the average 70 per cent concentration and investment before now by the PFAs.
This was shown in the National Pension Commission (PenCom) report titled: “Unaudited Report on Pension Funds Industry Portfolio for the Period Ended 30 September 2025.
Meanwhile, Nigeria’s pension industry has crossed a major financial milestone, rising through the N26 trillion mark for the first time in history, according to the National Pension Commission’s (PenCom) unaudited portfolio report for the period ended 30 September 2025.
With total assets rising to N26.09 trillion, the pension sector added N194.17 billion in just three months, a surge that reflects both investor confidence and a silent, strategic realignment by Pension Fund Administrators (PFAs) seeking better returns for millions of Nigerian workers.
Going by the shift from heavy concentration in Federal Government Securities, the report showed that Domestic Equities surged to N3.66 trillion, boosted by renewed investor sentiment in the capital market, while foreign equity holdings hit N277.49 billion despite continued foreign exchange tightness.
Findings, however, show that PFAs are cautiously returning to the stock market after months of volatility, a move that could inject fresh liquidity into Nigerian equities in the months ahead.
Beside, Corporate Debt holdings in the report climbed to N2.24 trillion, their highest level yet, signaling renewed confidence in private sector creditworthiness and the growing appeal of infrastructure-linked instruments.
Real Estate, Private Equity and Infrastructure Funds gain traction standing at N243.35 billion, N260.53 billion and N240.39 billion consecutively.
REITs and Mutual Funds on the other hand combined for N317.09 billion.
This deepening presence in alternative assets marks the clearest sign that PFAs are preparing for a long-term battle against inflation by tapping asset classes with stronger real-return potential.
Few months ago, the PenCom’s Director-General, Omolara Oloworaran expressed displeasure on overconcentration in FGN securities by PFAs, noting that plans are on diversifying pension fund investments into private equities and among other investment that would withstand inflation on pension funds.
Speaking at a PFAs’ Board Strategy & Risk Committees workshop, Oloworaran revealed that 62 percent of pension assets then estimated at N24.11trillion were invested in FGN instruments even as less than three percent had been deployed into alternative assets like infrastructure and private equity.
She stated that too much investment in Government Bonds is not enough in growth and sounded alarm on pension fund risks.
She said Nigeria’s pension funds remain dangerously overexposed to Federal Government securities, and unless action is taken now, contributor savings may not be positioned to deliver strong real-returns in a volatile economy.
The misperception of safety with liquidity has limited the ability of PFAs to optimally deploy pension funds under their management,” she said, calling on PFAs to rethink what “safety” really means.
According to Oloworaran, the longstanding reliance on government bonds while historically justified is no longer sufficient in Nigeria’s current macroeconomic climate.
She argued that the rising cost of living, sharp currency movements, and weakening purchasing power of Retirement Savings Account (RSA) holders demand a more “dynamic and resilient” investment strategy.
She emphasized that too much concentration in sovereign debt is a “single basket” risk, and diversification is essential to stabilize returns over time.
To address this imbalance, Oloworaran said she is advocating for a realignment of pension funds toward alternative, higher-yielding asset classes:
She supports increasing the regulatory cap on how much PFAs can invest in infrastructure and private equity, arguing that more headroom is needed for long-term savings to benefit both contributors and the economy.
Rather than backing only subsidised government projects, PenCom under her watch wants pension assets to finance commercially viable infrastructure. These could include roads, power, and energy projects not just social housing.
She urged PFAs’ Risk and Strategy committees to deepen their vigilance: “Scenario analyses must be robust,” she said, and decision-making must be informed by sound risk assessments and proper governance.
With her bold call to loosen the grip on government bonds, Oloworaran is signaling a paradigm shift that seems to have started with the September 2025 report.