Nigeria’s Pension Funds Surge 18% to ₦15.8 Trillion in Federal Government Securities — PenCom Report

Nigeria’s pension fund investments in Federal Government (FG) securities have risen sharply by 18.1 per cent year-on-year, hitting ₦15.82 trillion as of August 2025, according to new data from the National Pension Commission (PenCom).

The figure represents a significant increase from ₦13.39 trillion recorded during the same period in 2024, underscoring pension managers’ strong preference for government-backed assets amid economic uncertainty and high interest rates.

Analysts say the surge is driven largely by the Central Bank of Nigeria’s (CBN) tight monetary policy and sustained high Monetary Policy Rate (MPR), which stood at 27.5 per cent before a marginal reduction to 27 per cent last month.

They noted that the high MPR made government securities more attractive, offering investors higher returns with minimal risk, compared to private sector instruments.

“The consistent increase reflects confidence in Federal Government securities, which remain the safest investment class in the market,” one financial analyst told Vanguard.

Breakdown of Pension Assets

According to PenCom’s August 2025 portfolio report, Federal Government securities now account for 61.1 per cent of Nigeria’s total pension assets, valued at ₦25.89 trillion.

The report listed various categories of investments, including FGN Bonds, Treasury Bills, Sukuk Bonds, Agency Bonds, and Green Bonds.

The Hold-To-Maturity (HTM) FGN Bonds remain the dominant investment, accounting for ₦13.28 trillion (83.9%) of the total portfolio. This is followed by Available-For-Sale (AFS) Bonds, valued at ₦1.18 trillion (11.4%).

Treasury Bills made up ₦610.31 billion (3.9%), while Sukuk Bonds and Green Bonds contributed ₦100.8 billion (0.63%).

Economic Context

The CBN’s interest rate strategy has been a balancing act between curbing inflation and sustaining economic growth. The slight drop in the MPR, analysts said, was designed to stimulate lending without undermining the ongoing fight against inflation.

Despite the modest adjustment, investors continue to favour government instruments due to their low risk and stable yields, especially as inflation and global market volatility persist.