Pension assets rise by 22.6% to N22.51tn

DDM News

The Nigerian pension industry recorded significant growth in 2024, with total assets rising by 22.6% to N22.51 trillion in December, up from N18.36 trillion in December 2023.

This was revealed in the latest monthly report by the National Pension Commission (PenCom), released on Monday.

According to the  Diaspora digital media (DDM) report, pension assets grew month-on-month by 1.15%, increasing from N22.26 trillion in November to N22.51 trillion in December.

The total number of registered Retirement Savings Account (RSA) holders also reached 10,582,299, reflecting continued expansion in the pension sector.

Investment in Federal Government securities remained the preferred option for pension fund administrators (PFAs), followed by corporate debt securities and money market instruments.

However, PFAs have significantly increased their exposure to alternative asset classes, particularly private equities and infrastructure funds.

As of December 2024, investments in private equities stood at N147.86 billion, representing a 106.35% increase from N71.66 billion in the previous year.

Similarly, investment in infrastructure funds rose by 49.49% to N214.34 billion, indicating a growing focus on long-term development projects.

Domestic and foreign equity investments also surged by 41.8%, climbing from N1.77 trillion in 2023 to N2.51 trillion in 2024.

Other asset classes recorded notable growth, including Federal Government securities, which increased by 18.37% from N11.92 trillion to N14.11 trillion.

Corporate debt securities also saw a rise of 17.8%, reaching N2.25 trillion, while money market instruments expanded by 32.9% to N2.22 trillion.

The Pension Fund Operators Association of Nigeria (PenOp) attributed the rise in private equity investments to a growing interest in alternative investments.

“This suggests a rising interest in alternative investments, which typically carry higher risks but offer better returns in a high-yield environment,” PenOp stated on Tuesday.

Infrastructure funds also experienced substantial growth, increasing from N143.37 billion to N214.34 billion, reflecting policy incentives promoting pension fund participation in infrastructure projects.

PenOp noted that equities remained a key component of pension portfolios, with the Nigerian All Share Index performing strongly in 2024.

The expansion of money market instruments, from N1.67 trillion to N2.22 trillion, was linked to high yields on Federal Government treasury bills.

“These instruments provided attractive returns as the Central Bank of Nigeria attempted to control inflation,” PenOp added.

Although Federal Government securities remain the largest investment category, their slower growth suggests a gradual diversification of pension portfolios.

“While government bonds are still a significant component, there is a noticeable shift toward equities and alternative asset classes,” PenOp explained.

Corporate debt securities also maintained steady growth, increasing by 17.8% from N1.91 trillion to N2.25 trillion in 2024.

Private equity investments, which provide medium- to long-term financing in exchange for equity stakes in unlisted high-growth companies, are gaining traction among pension funds.

Analysts believe this trend reflects a broader strategy to achieve higher returns and hedge against inflation.

As pension assets continue to grow, experts emphasize the importance of maintaining a balanced investment approach to ensure long-term sustainability.

With the pension industry surpassing N22 trillion in assets, stakeholders remain optimistic about further expansion in the coming years.

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