The National Pension Commission (PenCom) has unveiled a revised regulation allowing Pension Fund Administrators (PFAs) to expand equity investments across four Retirement Savings Account (RSA) fund categories. While technical in nature, the update could have profound effects on the Nigerian capital market by giving PFAs more flexibility to deploy pension assets efficiently. Analysts believe this adjustment could unlock significant long-term capital for equities.
Under the new guidelines, RSA Fund I equity allocation rises from 30% to 35%, Fund II from 25% to 33%, Fund III from 10% to 15%, and Fund VI (Active) from 25% to 33%. These increases create additional room for investment in the domestic stock market, addressing previous constraints where limited alternative asset options left pension funds with excess liquidity. Based on PenCom’s December 2025 industry report, the potential equity inflow could reach N1.6 trillion if PFAs gradually adjust their portfolios toward the new limits.
The timing of the regulation is particularly favorable. Nigeria’s stock market has been buoyant, with the NGX All Share Index up 25.3% year-to-date as of February 20, 2026, following a record 50% return in 2025. Gains have been led by large-cap stocks such as MTN Nigeria, Seplat Energy, and Dangote Cement, signaling renewed investor confidence and stronger earnings visibility. This momentum, combined with pension inflows, could provide structural support for further market growth.
Macro conditions also make equities more attractive relative to fixed income. Inflation has moderated, the foreign exchange market is more stable, and business activity indicators are improving. Meanwhile, yields in the fixed income market are easing after prolonged periods of high returns, making equities appealing to long-term institutional investors. For pension funds with long-duration liabilities, these factors could drive portfolio rebalancing toward higher equity allocations, adding stability to market demand.
Robust dividend expectations further enhance market appeal. Many listed companies posted improved margins in 2025, and strong dividend payouts are anticipated in 2026. With pension funds providing long-term, stable capital, these combined factors—regulatory support, improved earnings, and attractive dividends—position Nigerian equities to potentially surpass last year’s performance. PenCom’s regulation is thus more than a technical update; it is a structural catalyst reshaping market liquidity and investor confidence.
source: nairametrics