By LOVETH AZODO, Lagos
In 2025, Nigeria’s pension industry entered one of its most consequential reform cycles since the introduction of the Contributory Pension Scheme (CPS) in 2004.
Under the leadership of the Director-General of the National Pension Commission (PenCom), Omolola Oloworaran, the sector moved decisively from incremental policy adjustments to a system-wide reform agenda known as Pension Revolution 2.0, defined by stronger compliance enforcement, improved benefit adequacy, governance reforms, and a recalibration of long-term investment strategy.
The year also marked the first full performance scorecard of the current PenCom leadership, with reforms translating into measurable fiscal, regulatory and social outcomes.
Clearing Legacy Liabilities and Strengthening Benefit Delivery
One of the most significant milestones of 2025 was the Presidential approval and disbursement of ₦758 billion to settle outstanding pension liabilities. The intervention addressed years of accumulated arrears and reinforced government commitment to pension obligations.
In addition, long-standing pension increment backlogs for Federal Government treasury-funded retirees some dating back to 2007 were cleared. From July 2025, PenCom restored zero waiting time for the payment of accrued pension rights, reversing a history of delayed benefit payments that had eroded trust in the system.
To further cushion retirees against inflationary pressures, the Commission introduced Pension Boost 1.0, which added ₦2.68 billion to monthly pension payments for CPS retirees, reinforcing benefit adequacy at a time of rising living and healthcare costs.
Compliance Enforcement and Measurable Recovery Gains
Compliance and enforcement became a central pillar of reform in 2025. PenCom fully automated the Pension Clearance Certificate (PCC) process, significantly reducing turnaround time, improving transparency and expanding compliance coverage across the pension ecosystem.
The Commission also extended compliance obligations beyond pension operators to include service providers and vendors linked to Licensed Pension Fund Operators (LPFOs).
According to PenCom, these measures contributed to a sharp rise in recoveries of outstanding pension contributions and penalties.
Between January and November 2025, total recoveries reached ₦4.04 billion, compared with ₦1.44 billion in the entire 2024 financial year.
Notably, ₦2.06 billion was recovered in the third quarter of 2025 alone. Strategic collaboration with the Independent Corrupt Practices and Other Related Offences Commission (ICPC) and engagement with state MDAs further strengthened enforcement, particularly in private education, healthcare and hospitality sectors.
PenCare Initiative and the Social Dimension of Reform
Beyond compliance and payments, 2025 marked a shift toward a more holistic view of retirement security with the launch of the PenCare Initiative, an industry-funded healthcare programme for CPS retirees.
The initiative responds to post-retirement vulnerabilities driven by inflation recorded at 22.97 per cent as of May 2025 rising healthcare costs and the termination of employer-based health insurance at retirement.
Structured as a CSR-driven programme, PenCare is jointly funded by PenCom and licensed pension operators, with no withdrawals from contributors’ Retirement Savings Accounts.
The programme will roll out in phases, beginning with 30,000 retirees across the six geopolitical zones, with long-term projections exceeding 300,000 beneficiaries, positioning healthcare security as a core component of retirement dignity.
Pension Assets and Portfolio Performance
As of 30 September 2025, the Net Asset Value (NAV) of pension fund assets stood at ₦26.09 trillion, representing a 5.93 per cent increase (₦1.46 trillion) from ₦24.63 trillion recorded at the end of June 2025. The growth was driven largely by favourable investment returns, particularly equity market appreciation during the period.
The pension asset pool comprised ₦18.28 trillion in RSA Active Funds, ₦1.97 trillion in RSA Retiree Funds, ₦2.71 trillion in Closed Pension Fund Administrators, and ₦3.14 trillion in Approved Existing Schemes.
Federal Government Securities remained the dominant asset class, accounting for 60.35 per cent of total investments. Within this category, FGN Bonds represented 57.53 per cent, Treasury Bills 2.36 per cent, while Agency, Sukuk and Green Bonds accounted for 0.46 per cent. The structure reflects the industry’s historically cautious approach, prioritising capital preservation, liquidity and stable returns.
However, diversification continued to deepen. Equities (domestic and foreign) accounted for about 15 per cent of assets, while Money Market Instruments represented roughly 9 per cent, supporting liquidity management.
Equity Gains and Diversification Signals
As at 30 September 2025, investments in domestic quoted ordinary shares rose to ₦3.66 trillion, representing 14.03 per cent of total Assets Under Management (AUM). This reflected a net increase of ₦579.54 billion, or 18.81 per cent, from ₦3.08 trillion recorded at the end of June 2025.
The growth was largely driven by appreciation in equity prices, with the Nigerian Exchange Pension Broad Index (NSE-PI) rising by 15.96 per cent in Q3 2025.
Meanwhile, investments in FGN Securities increased by ₦710.09 billion, or 4.84 per cent, to ₦15.74 trillion during the quarter, reflecting additional allocations to the asset class.
Notably, the fastest-growing asset classes during the period were Foreign Money Market Securities (+111.76 per cent), Cash and Other Assets (+74.26 per cent) and Mutual Funds (+19.13 per cent), signalling proactive liquidity management and rising exposure to foreign and collective investment instruments.
Outlook: Stability with a Gradual Shift to Growth
While the conservative portfolio structure continues to underpin stability, PenCom has acknowledged the need for broader diversification to enhance real returns and manage inflation and interest rate risks.
Revised investment regulations issued under Pension Revolution 2.0 aim to rebalance the portfolio toward infrastructure, private equity and other alternative assets without compromising fund safety.
As the industry heads into 2026, execution discipline will be critical. With stronger compliance, expanding coverage, rising asset values and a clearer strategic direction, Nigeria’s pension industry appears better positioned than at any point in its history to deliver sustainable retirement security and contribute meaningfully to long-term national development.
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