Efforts to channel pension funds into infrastructure development may continue to face setbacks as Pension Fund Administrators (PFAs) remain heavily attracted to the capital market, driven by more competitive yields.
The latest National Pension Commission (PenCom) monthly report shows that PFAs’ exposure to equities and Federal Government of Nigeria (FGN) securities now accounts for about 73.9 per cent, or N20.29 trillion, of the total pension fund assets valued at N27.45 trillion as of December 2025.
The report indicates that investments in both the stock market and FGN securities have risen significantly over the period, largely due to attractive returns compared with long-tenor infrastructure assets, which often come with lower yields and longer gestation periods.
According to the data, PFAs’ exposure to equities appreciated to N3.96 trillion as of December 2025, representing a year-on-year (YoY) increase of N1.71 trillion or 76.4 per cent from N2.24 trillion recorded in 2024. The sharp rise reflects strong performance in the Nigerian stock market and renewed investor confidence.
Similarly, investments in FGN securities climbed to N16.33 trillion at the end of December 2025, marking an increase of N2.22 trillion or 15.7 per cent from N14.11 trillion in 2024. The steady growth underscores the continued appeal of government-backed instruments, which offer relatively high yields with lower risk.
FGN securities include a wide range of instruments such as FGN Bonds held-to-maturity (HTM), FGN bonds available-for-sale (AFS), Treasury Bills, agency bonds issued by the Nigeria Mortgage Refinance Company (NMRC), Sukuk (HTM and AFS), Green Bonds, and state government securities.
Market analysts note that while regulators have consistently encouraged PFAs to support infrastructure financing, the prevailing high-yield environment in equities and government securities makes a major shift unlikely in the near term. Until infrastructure projects offer competitive risk-adjusted returns, pension funds are expected to maintain their preference for capital market instruments.
