By Muhammad Mamman
Nigeria’s pension fund investments in Federal Government (FGN) securities jumped by 17.2% year-on-year, reaching ₦15.2 trillion in H1 2025—up from ₦12.96 trillion in the same period last year.
This surge, detailed in the latest industry portfolio report by the National Pension Commission (PenCom), comes as fund managers increasingly turn to low-risk, high-yield government instruments in response to the Central Bank of Nigeria’s tight monetary policy.
Key Highlights:
• FGN securities now make up 61.7% of Nigeria’s total pension fund assets, valued at ₦24.63 trillion as of June 2025.
• The Monetary Policy Rate (MPR) has remained steady at 27.5% since December 2024—one of the key drivers of increased appetite for fixed-income investments.
• The bulk of investments were in Hold-to-Maturity (HTM) FGN Bonds, accounting for ₦12.79 trillion or 84.2% of total FGN securities.
• Other allocations include:
• Available-for-Sale (AFS) FGN Bonds: ₦1.7 trillion (11.2%)
• Treasury Bills: ₦624.15 billion (4.1%)
• Sukuk Bonds (HTM): ₦89.64 billion (0.6%)
Why the Shift?
According to David Adonri, Executive Vice Chairman at Highcap Securities, the rising inflation and CBN’s unwavering MPR stance have steered PFAs toward safer, yield-generating assets like FGN bonds.
“The high interest rate environment is attracting PFAs to government securities, especially in a climate where inflation remains stubborn,” Adonri said.
Mallam Garba Kurfi, CEO of APT Securities & Funds, added that FGN bonds offer availability, stability, and lower risk, making them more appealing than volatile equities—even as stocks post higher returns.
“Pension funds are drawn to FGN instruments because they’re readily available and government-backed, reducing risk exposure,” he noted.
Bottom Line
Rising interest rates, inflationary pressures, and the federal government’s borrowing drive to cover budget deficits are fueling a pension portfolio shift towards government-backed fixed-income securities—positioning them as the cornerstone of Nigeria’s pension investment landscape in 2025.
