PenCom expands investment options, caps corporate exposure at 25%

Nigeria’s pension regulator has rolled out new guidelines that expand the range of permissible investments for retirement savings while tightening risk controls, including a cap that limits exposure to a single corporate entity at 25 percent.

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The National Pension Commission (PenCom) said the revised rules introduce fresh instruments such as reverse repos, gold receipts, securities lending, commodity-backed assets and agriculture investment funds.

“Single Entity Exposure Cap – across the six funds within the Multi-Fund Structure, PFAs must not hold more than 25 per cent of instruments issued by a single corporate entity,” it said Thursday.

Pension funds may also take part in private placements by registered corporate entities and use derivatives for risk management.

To balance risk and improve returns, PenCom trimmed allocations to plain federal government securities across all funds, though asset-backed options are allowed as an offset.

At the same time, it raised limits for infrastructure funds to encourage impact investing and protect savers from inflation.

The commission also directed pension fund administrators to integrate environmental, social and governance (ESG) standards into investment decisions, with priority given to governance, responsible investing and long-term commitments to sectors that support national development.

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Operational frameworks for non-interest investments and co-investment of pension funds were consolidated in the new guidelines, which also provide clearer definitions for terms including those related to Fund VI, an ethical fund.

As of June, Nigeria’s pension assets have grown to about N25 trillion, making them one of the country’s largest pools of long-term domestic capital.

Regulators have been under pressure to ensure the funds are not only secure but also channelled into sectors that can drive growth and create jobs.

PenCom said the reforms aim to strengthen regulatory clarity, enhance diversification and improve long-term returns for the millions of Nigerians saving for retirement.