Abuja: Pension consultants have advocated for the deepening of Nigeria’s capital market through the creation of more investable instruments to sustain the growth of pension assets beyond the current N31.48 trillion. The experts noted that a more robust and liquid capital market would provide Pension Fund Administrators (PFAs) with broader investment opportunities, generate stronger long-term returns, and support economic development.
According to News Agency of Nigeria, Dr. Babatunde Raimi emphasized the need for Nigeria to strengthen its domestic capital market to accommodate the growing size of pension assets. He suggested that the government should create more investable instruments to absorb long-term pension funds, as large pension assets necessitate equally large-scale investment opportunities. Raimi advocated for greater diversification of pension investments into areas such as infrastructure, agriculture value chains, Real Estate Investment Trusts (REITs), venture capital, private equity, green finance, and digital economy projects.
Raimi also urged the National Pension Commission (PenCom) to expand the Personal Pension Plan by engaging fintech firms, mobile money operators, cooperatives, trade unions, professional associations, and market associations to drive enrollment, particularly among informal sector workers. He recommended simplifying pension registration through the use of Bank Verification Numbers (BVN), National Identity Numbers (NIN), and mobile technology, with flexible contribution options.
Furthermore, Raimi highlighted the importance of improved financial literacy, as many workers still view pensions as mere deductions rather than long-term investments. He proposed pension education initiatives starting from the National Youth Service Corps (NYSC), universities, civil service induction, and corporate onboarding, alongside advocating for tax incentives to encourage additional voluntary pension contributions.
Projecting the industry’s future, Raimi suggested that pension assets could reach between N45 trillion and N50 trillion within the next three to five years if contributions, investment returns, compliance, and macroeconomic stability are maintained. He emphasized the role of technological innovations, including Artificial Intelligence, blockchain, and automation, in enhancing onboarding, compliance, fraud prevention, customer service, and investment reporting.
Mr. Ehimeme Ohioma, another pension consultant, discussed the need for targeted incentives to expand pension participation in the informal sector. He referenced Rwanda’s model, where the government matched pension contributions for a specified period to boost participation, later withdrawing incentives once contributors gained confidence in the scheme. Ohioma also recommended investing a minimum of 10 percent of pension assets under management in foreign currency-denominated assets to strengthen diversification.
Ohioma stressed the importance of continuous enforcement of pension laws and regulations, stronger risk-based supervision of licensed pension operators, and prompt funding of pension obligations by governments and employers. He noted that the recent increase in pension assets was due to regular contributions, strong investment returns, and prompt payment of accrued retirement benefits by the current administration.
Overall, Ohioma expressed optimism for sustained growth in the pension industry, contingent upon the effective execution of PenCom’s technology-driven initiatives to improve compliance, expand coverage, and encourage more states to adopt the Contributory Pension Scheme (CPS).