Stakeholders in the pension and investment industries are advocating alternative investment options for the N24 trillion pension fund assets to increase investment returns for contributors in the country.

The nation’s pension fund assets were valued at N24.11 trillion as of 30th of May 2025.

The stakeholders, who spoke at a sensitisation workshop organised by the Pension Industry in partnership with FSDA-Africa, on ‘Investment In Alternative Assets For Chairpersons Of Board Investment Strategy And Risk Management Committees Of Pension Fund Administrators (PFAs)’ in Lagos at the weekend, noted that, there is the need for urgency to expand investment outlets of pension assets in which contributors and investors are the main beneficiaries.

On his part, the former chairman of the Chilean Pension Regulator, Guillermo Larraín, at the event, gave series of compelling case studies which formed the bulk of Chile’s pension experience and this assisted the country to make inroad to deploying pension assets into infrastructure, real estate, and private equity.

While asking Nigeria to borrow a leaf from the Chilean pension industry experience to widen the investment outlets of its pension industry, he gave insight into the regulatory consequences and practical realities of alternative investments, providing participants with tested frameworks and practical tools for implementation within the Nigerian context.

Similarly, the British deputy high commissioner, Jonny Baxter has promised the United Kingdom’s commitment to supporting Nigeria’s transition to more strategic deployment of long-term capital.

“Nigeria’s pension industry represents a tremendous pool of long-term capital and stands as a testament to the country’s progress. However, a significant portion of these funds remain invested in conventional instruments, creating a compelling case for broader portfolio diversification into high-impact sectors,” he said.

Infrastructure, clean energy and logistics, he said, are becoming increasingly attractive, underpinned by reforms and growing investor confidence—offering promising avenues for long-term investment.

Moreover, the senior specialist, Catalytic Transactions , FSD Africa,  Adebayo Araoye, explained different inroads his company has made in the nation’s capital market and pension assets investment, disclosing that, his firm is ever ready to take Nigeria through its next phase of investments of pension funds in alternative outlets that will ensure contributors continue to enjoy better returns and assure them of secured future in retirement.

Meanwhile, a former director in the Central Bank of Nigeria (CBN) and finance expert, Shamsudeen Attahiru Nasarawa, noted that, over time, increased pension contribution and investment returns were instrumental to the continuous growth of pension assets.

He, however, recommended that about 65 per cent of the assets be invested in private equity because it has quick investment returns, although its risk exposure too is high. “Given a seemingly small five per cent allocation to private equity, the impact is immense on the entire assets. Though there is growth in pension assets, the challenge lies in real returns, hence, alternative investment is a solution of which private equity funds offer the best solution. The power of diversification to private equity and alternative investment is the way to go,” he pointed out.

While urging the regulator, which is the National Pension Commission (PenCom), to reevaluate the current assets allocation strategies, he called on the pension industry to actively explore and allocate alternative assets to leverage their higher growth potentials and diversification. The regulator should increase allocation for investment into alternative channels, rather than putting most of the assets in federal government securities that don’t promote real returns on investment, he pointed out.

Earlier at the event, the director general, PenCom, Ms. Omolola Oloworaran disclosed that the commission is considering diversification to alternative asset classes for higher returns, amid rising volatility in the economy.

She stated that, while traditional asset classes such as bonds and public equities have served their purpose, the current economic landscape characterised by volatility, rising inflation and declining purchasing power of the pension contributors requires dynamic and resilient investment strategies.

This potential shift, she said, comes as part of efforts to optimise returns for pension contributions, amid evolving market conditions and the need for more resilient, higher-yield investment options.

According to her, “alternative assets provide a complimentary pillar to core investment strategies of pension funds. Investments in infrastructure and private equity, in particular, help align pension fund portfolios with their investment horizon, provide opportunities for diversification of pension assets and enhance risk adjusted returns.”

“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 charged chairpersons and MDs of Pension Fund Administrators (PFAs) present at the event.

Urging them to continuously interrogate whether their respective PFAs’ investment strategy aligns with the long-term liabilities of the pension scheme and reflects a prudent balance of risk and return, she stressed that, the global financial landscape is becoming more complex, with growing exposure to market volatility, geopolitical uncertainties, and evolving asset classes.

The overarching theme of investment in the pension industry, she disclosed, has consistently been the preservation of capital and generation of fair returns, although , the misperception of safety with liquidity has limited the ability of PFAs to optimally deploy pension funds under their management. Consequently, she said, the Nigerian pension funds are yet to fully optimise investment potentials, despite the favourable long-term demography of members.