Nigeria’s pension industry records N4.94trn annual gain

Nigeria’s pension industry expanded sharply in 2025, with total assets under management rising by N4.94 trillion over the year to close at N27.45 trillion in December, according to data from National Pension Commission (PenCom).

The 22 percent year-on-year growth underscores the resilience of the Contributory Pension Scheme (CPS), supported by steady employer and employee contributions, improved compliance and stronger investment returns across fixed income and equities.

The December close capped a year of uninterrupted monthly expansion, reinforcing the sector’s role as one of Nigeria’s most stable pools of long-term domestic capital despite a challenging macroeconomic environment, analyst in the industry said.

Pension assets rose progressively from N22.86 trillion in January 2025 to N23.26 trillion in February and N23.38 trillion in March. By mid-year, assets had climbed to N24.62 trillion, before accelerating in the second half to N25.89 trillion in August, N26.66 trillion in October, N27.05 trillion in November and ultimately N27.45 trillion in December.

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On a year-on-year basis, the industry expanded significantly. Total pension assets stood at N22.51 trillion in December 2024. The increase of N4.94 trillion over 12 months translates to approximately 22 per cent growth, reflecting both fresh contributions and investment returns.

Industry analysts attribute the December growth and broader annual expansion to three primary factors including sustained pension contributions, investment income across asset classes and expansion of RSA funds.

Mandatory employer and employee contributions under the CPS continued to provide steady inflows, and this has been supported by improved compliance among corporate employers and the expansion of coverage contributed to the accumulation of assets throughout the year.

PFAs benefited from improved yields in fixed income markets and positive performance in domestic equities during parts of the year. Both realised and unrealised gains contributed to the increase in assets under management, while the bulk of the growth came from Retirement Savings Account (RSA) Funds, particularly Funds II and III, which account for the largest share of contributors.

RSA Fund II, the default fund for active contributors below 50 years, grew from N9.24 trillion in December 2024 to N11.52 trillion in December 2025, an increase of N2.28 trillion.

RSA Fund III rose by about N1.10 trillion to N7.02 trillion, while RSA Fund IV, designed for retirees, also recorded significant growth, adding roughly N630 billion during the year.

These three funds collectively represent the core of pension savings within the system and were instrumental in driving the overall asset expansion.

A review of portfolio composition shows that Federal Government securities remained the dominant investment class, accounting for the largest share of pension assets. Holdings in FGN bonds and treasury bills continued to provide stability and predictable returns.

Corporate debt securities and money market instruments also contributed meaningfully, offering attractive yields amid tight monetary conditions. Meanwhile, domestic equities supported asset growth during periods of market rally, helping diversify returns.

The balanced allocation across fixed income, equities and other instruments helped cushion portfolios against volatility while sustaining steady growth in total assets.

The steady 22 per cent year-on-year growth signals resilience within Nigeria’s pension industry despite macroeconomic pressures. With assets now at N27.45 trillion, the sector continues to deepen its role in long-term domestic capital formation.

PenCom has repeatedly emphasised its commitment to expanding coverage, particularly within the informal sector through initiatives such as the Personal Pension Plan (PPP), while also refining investment guidelines to enhance diversification and returns.

If the current trajectory is sustained, analysts say the industry could see further acceleration in asset growth in 2026, supported by stronger investment performance and broader participation in the pension system.

Modestus Anaesoronye is a leading Nigerian financial journalist with over two decades of experience reporting on the insurance and pension sectors across Nigeria and West Africa. He has held key editorial positions at major national media outlets, including The Comet, The Nation, and Financial Standard, and currently serves as a Senior Financial Analyst at BusinessDay Media Ltd.

A widely travelled reporter, he has covered industry developments in more than 14 countries across Africa and Asia.

Anaesoronye is a multiple award-winning journalist, honoured several times as Insurance Journalist of the Year and Pension Journalist of the Year by recognised industry bodies, including PensionScope and the Pension Fund Operators Association of Nigeria (PenOp), among others.

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