PenCom laments investment gaps amid N5.51tn real sector injection

The National Pension Commission has lamented the limited availability of investable instruments that currently meet the minimum requirements for pension funds’ investments in Nigeria.

This is even as the regulator revealed that a total of N5.51tn has been committed to asset classes that support long-term financing for real sector growth.

These investments span infrastructure, private equity vehicles, real estate, and sub-national infrastructure initiatives, among others.

According to a statement from PenCom on Tuesday, this was disclosed during a meeting between PenCom and a delegation from the International Monetary Fund as part of the Fund’s Article IV Consultations. The delegation, led by Mr. Jose De Luna, Senior Financial Sector Expert, held discussions with PenCom’s key officials on matters relating to the pension industry and broader financial sector developments.

The Director General of PenCom, Ms Omolola Oloworaran, who was represented by the Head of the Surveillance Department, Abdulrahaman Saleem, told the IMF delegation that pension fund investments in the real sector of the economy are indicative of the pension industry’s vital role in providing funding for key economic growth and development in Nigeria.

In a presentation to the delegation, PenCom said the industry Net Asset Value increased by 22.65 per cent from N18.36tn as of 31 December 2023 to N22.51tn as of 31 December 2024. The growth was attributable to additional contributions received and investment income.

However, the Director General decried the Investment gap for PFAs.

“She told the delegation that only 86 investable instruments, constituting part of the pension broad index, meet the minimum quality requirement for pension fund investments that are liquid and have the required free float. This is despite the numerous provisions made in the Investment Regulation to foster increased eligible investment outlets.

“Going forward, PenCom will continue to collaborate with capital market operators to broaden the spectrum of eligible financial instruments for pension fund investments. This initiative aims to further diversify portfolios and enhance real returns. Additionally, the Commission will promote increased pension fund investment in alternative asset classes. These efforts are intended to strengthen the overall investment portfolio and reinforce the long-term growth and sustainability of the Contributory Pension Scheme,” the statement said.

During the meeting, PenCom presented key developments within the pension industry, focusing on investment strategies, asset quality concerns, financing for growth, and regulatory challenges.

The statement added that the IMF delegation expressed satisfaction with PenCom’s ongoing efforts to diversify pension fund investments. Additionally, they commended PenCom’s regulation and supervision of the pension industry in Nigeria.