Business a.m.
Pension Fund Administrators (PFAs) have channelled more than N14.5tn of workers’ retirement savings into Federal Government securities as of March 2025, reinforcing the industry’s deep dependence on sovereign debt.
According to figures obtained from the National Pension Commission, investments in Federal Government securities stood at N14.48tn in the first quarter of 2025, representing 62.09 per cent of the total pension assets of N23.33tn. In June 2023, the comparable figure was N10.86tn, equivalent to 64.78 per cent of assets valued at N16.76tn.
This means PFAs increased their holdings in government paper by N3.62tn over six quarters, a rise of 33.3 per cent, even though the asset class shed 2.69 percentage points in overall portfolio weight. The data show that Federal Government bonds remain the cornerstone of pension portfolios.
Holdings in bonds climbed from N10.40tn in June 2023 to N13.79tn in March 2025, an increase of N3.39tn or 32.6 per cent, though their share of total assets dropped from 62.07 per cent to 59.1 per cent. Treasury bills recorded an even sharper surge, rising by N400.8bn or 208.3 per cent from N192.4bn to N593.2bn, lifting their weight from just 1.15 per cent to 2.54 per cent.
Sukuk declined from N152.4bn to N94.8bn, a fall of N57.6bn or 37.8 per cent, while agency bonds shrank from N12.1bn to N7.4bn, a reduction of 38.9 per cent.
Green bonds all but disappeared, collapsing from N96.7bn in 2023 to only N2.5bn in 2025, representing a dramatic 97.4 per cent decline.
The rapid expansion in nominal allocations underlines the gravitational pull of government debt in Nigeria’s financial system, but the falling weight in percentage terms suggests that growth in other asset classes, particularly equities and corporate debt, has modestly outpaced sovereign securities.
Nevertheless, the fact that nearly two-thirds of pension assets remain tied to government borrowing highlights the conservative approach of PFAs in an uncertain economic environment. Commenting on this, PenCom noted in its Q1 2025 report, “Investor demand for government securities remained strong, with yields adjusting slightly downward amid expectations of lower inflation and stable interest rates.
“The Federal Government of Nigeria continued to issue sovereign debt to finance fiscal operations, further supporting market depth and performance.”
Total pension assets grew by N6.57tn between June 2023 and March 2025, a rise of 39.2 per cent. Of this increase, government securities alone accounted for 55 per cent, meaning more than half of the industry’s asset growth in the past two years was absorbed by federal debt.
While contributors’ funds are technically safe, the sustainability of this strategy is questioned, especially as inflation averaged above 20 per cent during the same period. Equities saw the sharpest proportional improvement in pension portfolios. Domestic ordinary shares doubled from N1.27tn in 2023 to N2.57tn in 2025, an increase of N1.30tn or 102.8 per cent.
Their weight rose from 7.57 per cent to 11.02 per cent, reflecting the strong rally on the Nigerian Exchange, where the All Share Index surpassed 105,000 points by early 2025. Yet, equities remain far behind government securities in absolute value, underlining PFAs’ risk aversion.
Corporate debt also expanded, but at a slower pace. Investments rose from N1.88tn in 2023 to N2.35tn in 2025, an increase of N466.4bn or 24.7 per cent, though the share of the total portfolio slipped from 11.25 per cent to 10.07 per cent. Bank placements grew from N1.38tn to N1.76tn, up by N379.2bn or 27.4 per cent, while commercial papers rose from N170.6bn to N250.3bn, an increase of N79.7bn or 46.7 per cent.
Alternative assets remain a marginal slice of the portfolio despite regulatory encouragement. Real estate grew from N216.4bn to N259.1bn, a rise of N42.7bn or 19.7 per cent, but its share fell from 1.29 per cent to 1.11 per cent.
