By David Akinmola
Nigeria is preparing a major shift in its pension investment framework as regulators move to ease restrictions on how retirement savings can be deployed.
The National Pension Commission (PenCom) has confirmed it is in the final stages of reviewing the current rules that cap pension fund investment in infrastructure and private equity at just five per cent.
The reform could pave the way for a greater portion of the country’s $17 billion pension assets to be channeled into long-term, high-impact projects that drive economic growth while enhancing returns for contributors.
Speaking on the planned changes, a senior PenCom official, who asked not to be named because discussions are ongoing, said the review was aimed at striking a balance between safeguarding contributors’ funds and unlocking capital for national development. “Nigeria’s pension industry has grown steadily over the past two decades. It is now time to ensure these funds also catalyze sustainable economic growth, without compromising the safety of retirees’ savings,” the official explained.
Industry stakeholders have long called for deeper reforms to pension investment guidelines, arguing that restrictive rules have left billions of naira sitting in low-yield government securities.
Analysts believe redirecting part of these funds into infrastructure, power, transport, and technology would not only boost national development but also provide higher, long-term returns.
A Lagos-based economist, Dr. Chika Onyeka, described the move as timely. “Nigeria has a huge infrastructure financing gap estimated at over $100 billion. Pension funds, if prudently managed, can provide the patient capital needed to close that gap. The review is a win-win for retirees and the economy,” Onyeka said.
However, concerns remain over potential risks. Infrastructure and private equity investments are typically illiquid and can be volatile, raising questions about how funds would be safeguarded. PenCom has indicated that strong governance structures, risk assessment frameworks, and independent monitoring would accompany the revised guidelines.
“Global best practices show that pension funds can successfully invest in alternatives when there is transparency, accountability, and professional management,” noted Abiola Fashina, a pension industry consultant. “Canada, Chile, and South Africa have achieved this balance, and Nigeria can learn from those models.”
Nigeria’s pension industry, established under the Contributory Pension Scheme (CPS) in 2004, has grown into one of Africa’s largest, with over 10 million contributors.
The planned reforms signal a new phase where pension funds could play a more active role in financing national priorities, from roads and railways to renewable energy and digital infrastructure.
Observers say if the review is approved, it could transform the pension sector into a critical engine for Nigeria’s development agenda, while still fulfilling its core mandate of securing the future of retirees.
