Pension Fund Administrators (PFAs) and Closed Pension Fund Administrators (CPFAs) are increasingly shifting funds into foreign assets as Nigeria continues to grapple with exchange rate fluctuations. According to the latest report from the National Pension Commission (PenCom), CPFAs grew their investments in foreign money market instruments by 12.4 percent, rising from N83.7 billion in July 2025 to N94.1 billion in August 2025. Their exposure to foreign equities also increased slightly by 2.2 percent to N277.4 billion within the same period.
This renewed interest in offshore assets comes after PenCom introduced new guidelines permitting PFAs to diversify into foreign currency-denominated instruments. Previously, only CPFAs were allowed to invest in such assets, particularly because many of them pay employees in foreign currencies. With this policy change, PFAs managing the retirement savings of millions of Nigerian workers can now leverage international opportunities to hedge against local currency risks.
At the same time, investments in domestic instruments remain significant. Pension assets in Federal Government securities grew by 1.3 percent to N15.8 trillion in August, largely driven by a 3.4 percent jump in FGN bonds to N15.1 trillion. Treasury bill investments also rose modestly by 2.3 percent, while holdings in Sukuk bonds sharply declined by 71.7 percent to N100.9 billion. Interestingly, green bonds gained traction, surging by 17.9 percent to N12.5 billion, reflecting a gradual shift toward sustainable financing.
PenCom explained that the updated framework was designed to widen the scope of the Contributory Pension Scheme (CPS), especially for Nigerians earning in foreign currencies, including those in the diaspora. Contributors will now be able to remit their pension savings directly from domiciliary or non-resident accounts, offering a more transparent and secure mechanism for managing funds. This, according to the commission, strengthens the sector’s resilience while aligning Nigeria’s pension system with global best practices.
The new regulation also expands investment windows for pension funds. PFAs can now explore Eurobonds, global depository notes, supranational bonds, and specialist funds such as Real Estate Investment Trusts (REITs) and private equity vehicles. Analysts believe this diversification will not only improve returns for contributors but also provide long-term capital for infrastructure and economic development, positioning Nigeria’s pension industry as a key player in both domestic and international financial markets.
source: vanguard