By Rosemary Iwunze

The National Pension Commission, PenCom, has lamented that the pension funds are yet to fully optimise investment potentials, despite the favourable long-term demography of members.

According to PenCom, the current economic landscape characterised by volatility, rising inflation and declining purchasing power of Retirement Savings Account (RSA) contributors, requires dynamic and resilient investment strategies.

Director General of PenCom, Ms Omolara Oloworaran disclosed this yesterday while giving her opening remarks at the sensitization workshop on Investment in Alterative Assets for chairpersons of Board Investment Strategy and Risk Management Committees of Pension Fund Administrators in Lagos.

According to Oloworaran, pension funds can effectively leverage these opportunities to mitigate portfolio concentration risk, enhance investment returns, and achieve sustainable growth.

She said: “The overarching theme of investment in the pension industry has consistently been the preservation of capital and generation of fair returns. However, the misperception of safety with liquidity has limited the ability of PFAs to optimally deploy pension funds under their management. Consequently, the Nigerian pension funds are yet to fully optimized investment potentials, despite the favourable long-term demography of members.

“Today, over 80% of pension fund assets are invested in fixed income securities with Federal Government Securities accounting for 62% of total pension assets valued at N24.11 trillion as of 30 May 2025; the allocation to alternatives assets (private equity and infrastructure funds) was only about 3%.

“While traditional asset classes such as bonds and public equities have served their purpose, the current economic landscape characterised by volatility, rising inflation and declining purchasing power of RSA Contributors, requires dynamic and resilient investment strategies. These strategies must optimally balance risks, return and long-term sustainability, while delivering a discount rate that addresses pension inadequacy.

“In this context, alternative assets provide a complimentary pillar to core investment strategies of pension funds offers. Investments in infrastructure and private equity, in particular, help align pension fund portfolio with their investment horizon, provide opportunities for diversification of pension assets and enhance risk adjusted returns.”