PenCom Opens Pension Funds to Foreign Currency Investments, Sets Reporting Rules for Contributions Above $10,000

The National Pension Commission (PenCom) has announced a major policy shift, allowing Pension Fund Administrators (PFAs) to invest a portion of pension funds in foreign currency-denominated instruments. This decision comes as the nation’s pension assets continue to grow, reaching N24.6 trillion by June 2025, reflecting the increasing importance of diversifying investment channels to boost fund performance.

PenCom also issued a directive requiring all PFAs and Pension Fund Custodians (PFCs) to report any foreign currency pension contributions above $10,000 to the Nigeria Financial Intelligence Unit (NFIU) within 24 hours. The move aims to ensure transparency, regulatory compliance, and tighter monitoring of cross-border pension inflows.

Previously, only Closed Pension Fund Administrators (CPFAs) had the authority to invest in foreign currency assets. Under the newly released “Guidelines on Foreign Currency Pension Contributions”, Licensed Pension Fund Operators (LPFOs) can now accept, manage, and invest foreign currency contributions under the Contributory Pension Scheme (CPS), creating broader opportunities for Nigerians earning abroad and diversifying pension investment portfolios.

PenCom highlighted that the new framework is designed to expand access to the CPS for contributors living overseas, provide secure mechanisms for managing foreign currency contributions, strengthen investment potential through diversified currency inflows, and ensure compliance with both local and international regulatory standards. The guidelines also outline specific account structures for contributors, including Non-Resident Nigerian Ordinary Accounts (NRNOAs) for diaspora Nigerians and Domiciliary Accounts (DAs) for residents.

The guidelines stipulate that PFAs must invest foreign currency contributions within Nigeria, in line with the Regulation on Investment of Pension Fund Assets. Importantly, these investments must be executed and maintained in foreign currency, primarily USD, opening new avenues for fund growth while safeguarding contributors’ retirement savings against domestic currency fluctuations.

source: vanguard