PFAs Diversify Into Infrastructure, Private Equity Growth
invest in export-oriented businesses, toll roads, real estate and high-growth unlisted companies to boost returns. In a Bloomberg report, the Chief Executive Officer of the Pension Fund Operators Association of Nigeria, Oguche Agudah, was quoted as saying that investment in alternative investments can enable fund operators to cover any potential losses caused by a depreciating currency and inflation.
The Stanbic IBTC Pension Managers Ltd CEO, Olumide Oyetan, in his comments, said that the pension fund industry is also urging the authorities to issue floating-rate bonds that are indexed to the inflation rate, indicating that the availability of the securities would help operators maximise the value of their fixed-income portfolios, currently the largest portion of their balance sheets, and help them guard against negative real returns.
Both Stanbic IBTC Pension and Access ARM Pension also noted that they have already been increasing their investments in private equity, infrastructure funds and real estate investment trusts within the current rules.
Meanwhile, Agusto & Co. in its 2025 Nigerian Pension Industry Report argued that there were some challenges, one of which is the limited coverage of the pension system, “particularly within the informal sector, which constitutes approximately 93 per cent of Nigeria’s workforce as of Q2 2024.” The Micro Pension Plan (which has now been rebranded), designed to extend retirement benefits to self-employed and informal sector workers, recorded a 51 per cent increase in enrolment to 172,936 participants by the end of 2024. However, only six per cent of these accounts were funded, emphasising the need for more effective engagement and financial inclusion strategies.”
Another challenge that the experts highlighted was the persistent issue of negative real returns. “In 2024, the average inflation of 33.18 per cent significantly outpaced the nominal returns of 17.0 per cent across the industry’s Fund II, eroding the real value of retirement savings and posing a substantial risk to long-term retirement security,” read the Agusto & Co report.
A similar concern had been raised by the DG of PenCom at the inaugural Pension Industry Leadership Retreat, with industry stakeholders charged to change the narrative.
Despite these challenges, experts agree that the industry is poised for continued growth and call for efforts to expand participation in the informal sector. Addressing the challenge of negative real returns, enhancing operational efficiency, and regulatory innovation will be pivotal to sustaining growth.
