Hot SourceEbere Nwoji
The Director General National Pension Commission (PenCom), Ms. Omolola Oloworaran, has said the Nigerian pension funds were yet to fully optimise investment potentials, despite the availability of favourable long-term demography to operators.
She said despite the fact that the overarching theme of investment in the pension industry had consistently been the preservation of capital and generation of fair returns, the misperception of safety with liquidity has limited the ability of Pension Fund Administrators (PFAs) to optimally deploy pension funds under their management.
Oloworaran, who stated these in her opening remarks at the sensitisation workshop on Investment in Alternative Assets for Chairpersons of Board Investment Strategy and Risk Management Committees of Pension Fund Administrators, noted that currently over 80 percent of pension fund assets were invested in fixed income securities with Federal Government Securities accounting for 62 percent of total pension assets valued at N24.11 trillion as of 30 May 2025.
She said the allocation to alternative assets (private equity and infrastructure funds) was only about three percent noting that while traditional asset classes such as bonds and public equities had served their purpose, the current economic landscape characterised by volatility, rising inflation and declining purchasing power of RSA Contributors, required dynamic and resilient investment strategies.
According to her, these strategies must optimally balance risks, return and long-term sustainability, while delivering a discount rate that addressed pension inadequacy.
“In this context, alternative assets provide a complimentary pillar to core investment strategies of pension funds offers. Investments in infrastructure and private equity, in particular, help align pension fund portfolio with their investment horizon, provide opportunities for diversification of pension assets and enhance risk adjusted returns.
“Let me stress that as Chairpersons of the Investment Strategy and Risk Committees, you occupy a position of trust. You have a fiduciary duty a legal and ethical obligation to act in the best interests of Retirement Savings Account holders at all times.
“This responsibility includes ensuring that investment decisions are based on sound strategy, robust risk assessments, and are compliant with the guidelines issued by the Commission”, she pointed out.
According to her, fiduciary responsibility also means independence of thought. It means resisting undue influence, asking hard questions, and insisting on transparency.
She further noted that it required that every investment decision was not only justifiable on paper but also defensible in principle.
“You must continuously interrogate whether your PFAs’ investment strategy aligns with the long-term liabilities of the pension scheme and reflects a prudent balance of risk and return”, she stated.
The PenCom boss noted the global financial landscape was becoming more complex, with growing exposure to market volatility, geopolitical uncertainties, and evolving asset classes, adding that in this context, it was no longer sufficient to rely on traditional investment approaches.
She challenged the investment strategy and risk committee members to deepen oversight of risk management frameworks, ensure that scenario analyses were robust, and advocate for portfolio diversification into permissible but less correlated asset classes such as infrastructure, private equity, and sustainable investments within the confines of regulation.
