The Nigerian pension industry portfolio grew about 22.60 per cent to close December 2024 at N22.51tn from N18.36tn as of December 2023.
This was disclosed in the latest monthly report from the National Pension Commission released on Monday.
According to the report, pension assets had grown month-on-month by about 1.15 per cent from N22.26tn to N22.51tn while the total number of registered Retirement Savings Account holders stood at 10,582,299.
Investment in Federal Government securities remained a top choice for licensed pension fund administrators, followed by corporate debt securities and money market instruments before mutual funds.
In terms of growth of investment in the asset classes, PFAs have doubled their investments in private equities. As of December, investment in private equities stood at N147.86bn, indicating a 106.35 per cent increase from N71.66bn in the previous year.
Similarly, investment in infrastructure funds rose by 49.49 per cent to N214.34bn, and that of domestic and foreign ordinary shares rose to N2.51tn, marking a 41.8 per cent increase.
Investment in other asset classes also grew, such as FGN securities (+18.37 per cent), corporate debt securities (+17.8 per cent) and money market instruments (+32.9 per cent).
Commenting on the rise in interest in private equities, the Pension Fund Operators Association of Nigeria, on Tuesday, stated, “This suggests a rising interest in alternative investments; alternative investments usually pose a higher risk than traditional asset classes but provide the potential upside of beating inflation in a high-yield environment. Infrastructure funds also saw substantial growth of 49.49 per cent, rising from N143.37bn to N214.33bn. This reflects an increasing emphasis on infrastructure investment, possibly driven by policy incentives encouraging pension fund participation in long-term development projects.
“Domestic and foreign ordinary shares grew by 41.8 per cent, increasing from N1.77tn to N2.51tn, with the Nigerian All Share Index recording another impressive year while money market instruments expanded by 32.9 per cent, from N1.67tn to N2.22tn, with yields on Nigerian FG treasury bills reaching their highest in years as the apex bank tried to rein in inflation.
FGN securities, while still the largest asset class in absolute terms, grew by a more moderate 18.37 per cent, increasing from N11.92tn to N14.11tn. The relatively slower growth indicates that while government bonds remain a significant component of investment portfolios, there is a gradual shift toward equities and alternative assets. Similarly, corporate debt securities grew by 17.8 per cent, from N1.91tn to N2.25tn.”
Private equity is medium- to long-term finance provided in return for an equity stake in potentially high-growth unquoted companies.