The National Pension Commission has urged pension fund administrators to diversify their investment portfolios by increasing allocations to alternative assets in a bid to enhance returns and ensure long-term sustainability.

The Director-General of the Commission, Omolola Oloworaran, made this call during a sensitisation workshop on investment in alternative assets held in Lagos for Chairpersons of the Board Investment Strategy and Risk Management Committees of PFAs.

Oloworaran said that over 80 per cent of pension fund assets are currently invested in fixed-income securities, with Federal Government securities alone accounting for 62 per cent of the total assets, which stood at N24.11 tn as of May 30, 2025.

She stressed that the current macroeconomic environment, marked by inflation, foreign exchange volatility, and declining purchasing power, requires dynamic and resilient investment strategies.

“In this context, alternative assets provide a complementary pillar to the core investment strategies of pension funds,” she said. “Investments in infrastructure and private equity, in particular, help align pension fund portfolios with their investment horizon, provide opportunities for diversification, and enhance risk-adjusted returns.”

The PenCom boss stated that the misperception of safety in liquidity has limited the ability of PFAs to fully optimise the investment potential of pension funds, despite Nigeria’s favourable demography.

She reminded PFAs of their fiduciary duty to retirement savings account holders, urging them to make decisions based on sound strategy and robust risk assessments.

“You have a fiduciary duty, a legal and ethical obligation, to act in the best interests of RSA holders at all times. This includes ensuring that investment decisions are based on sound strategy, robust risk assessments, and are compliant with the guidelines issued by the Commission,” Oloworaran added.

She also called for greater oversight of risk management frameworks and encouraged PFAs to consider permissible but less correlated asset classes such as infrastructure, private equity, and sustainable investments.

Also speaking, the British Deputy High Commissioner Jonny Baxter said the UK is supporting Nigeria’s transition towards smarter mobilisation of long-term capital, particularly through partnerships such as the green bond programme and catalytic investments into infrastructure.

“With over N22tn in assets under management, Nigeria’s pension industry is a major source of long-term capital, and it’s a remarkable success story,” he said. “But today, much of this capital remains in traditional instruments, presenting a clear opportunity to broaden portfolios and tap into sectors that drive Nigeria’s growth.”

Baxter added that infrastructure, clean energy, and logistics sectors are showing stronger fundamentals, backed by reforms and innovation, and present a viable opening for long-term capital deployment.

The workshop was organised in collaboration with FSD Africa and brought together key decision-makers in Nigeria’s pension investment space to explore the role of alternative assets in strengthening pension returns.

Additionally, the Chief Executive Officer of FCMB Pensions Limited, Christopher Bajowa, called on pension fund administrators to diversify their portfolios by increasing investments in alternative assets.

He noted that to generate inflation-plus returns for retirement savings account holders and contribute meaningfully to national development, the industry must begin to channel long-term capital into infrastructure, private equity, real estate and other viable alternative assets.

“The best way we can get real returns for pension funds is to begin to invest in real assets,” he said. “We must preserve value, generate higher, inflation-adjusted returns for our contributors and retirees, and, at the same time, ensure prudence and safety.”

Bajowa added that beyond returns, the long-term nature of pension funds positions them as critical tools for financing infrastructure and development projects that can transform Nigeria’s economy.

The PUNCH reported that the National Pension Commission says the total assets under the Contributory Pension Scheme rose to N23.33 tn as of March 31.