Yemisi Izuora
Strong commitment and leadership approach of the National Pension Commission (PenCom) has been instrumental to the process of amending the country’s Pension Reform Act.
This is in a move to align the legal framework with current market realities, even as the country’s pension industry pushes toward a 2027 recapitalization milestone.
The review comes amid a broader reform wave led by the National Pension Commission, or PenCom, with market participants increasingly focused on how policy changes could unlock industry growth, deepen capital market participation and expand long-term savings culture.
Speaking on the development as reported by CNBC Africa, Akimbola Akintola, partner at HRISP Partners, said the reform momentum reflects the approach of PenCom’s current leadership, which he described as energetic and execution-focused.
According to him, the commission’s direction has been broadly positive for the industry, particularly at a time when operators are also adjusting to revised recapitalization timelines.
The recapitalization deadline, which had initially been set for December, has been shifted to June of next year, giving pension fund administrators and other stakeholders additional time to meet new requirements. Even so, Akintola suggested that the regulator has not slowed its wider reform agenda.
He said the commission’s current leadership came in with a clear mandate to move the industry forward and has combined policy ambition with practical implementation. In his view, that has already translated into measurable expansion in pension assets.
Akintola said the industry has added roughly N10 trillion in assets under management in a relatively short period, bringing total pension assets to around N31 trillion. That pace of asset growth underscores the sector’s rising importance in Nigeria’s financial system and strengthens the case for reforms that could widen investment options for pension fund administrators while preserving safeguards.
One of the key issues discussed was deeper capital market engagement by pension funds. Nigeria’s pension assets have historically been concentrated in government securities and other relatively conservative instruments. But with the asset base growing rapidly, the debate is increasingly shifting toward how pension funds can play a larger role in domestic equities and broader market development.
Akintola pointed to an example involving Stanbic and Zenith to illustrate how existing rules can constrain investment choices. He explained that because Zenith serves as Stanbic’s custodian, Stanbic is unable to invest in Zenith Bank shares under the current structure. That restriction, he said, effectively removes a potentially significant institutional investor from a stock that is widely regarded as attractive, while also narrowing the range of eligible investments for the pension fund administrator.
He said the commission’s response has been to allow pension fund administrators to invest in the holding companies of their pension fund custodians, a change intended to broaden the investment universe without entirely discarding conflict-of-interest protections. While he noted that in Zenith’s case the listed entity remains the bank rather than the holding company, meaning further restructuring may be required, he said the principle behind the adjustment is clear: give PFAs more room to deploy capital into quality assets and support market depth.
That shift matters not just for the pension industry but also for the Nigerian stock market, where domestic institutional participation has become increasingly important. If implemented effectively, a wider investment mandate for pension funds could support liquidity in local equities, improve price discovery and strengthen the role of long-term domestic capital in financing corporate growth.
Beyond investment rules, PenCom’s roadmap also includes measures designed to broaden pension inclusion. Akintola highlighted the proposal to allow child pension registration as one of the more innovative ideas under consideration. Traditionally, pension participation in Nigeria has been tied to formal employment, with individuals typically entering the system only after reaching working age and meeting national service-related milestones.
Under the new concept, however, parents would be able to open pension accounts on behalf of their children and begin making contributions long before those children join the workforce. Akintola said this would effectively allow retirement savings to start compounding from an early age, potentially creating much larger retirement buffers over time.
He distinguished the proposal from existing savings products such as trust funds or mutual funds for children by emphasizing that a pension account would remain locked in until retirement age. In that sense, he said, the product is less about general savings and more about directly securing a child’s long-term financial future.
Another feature referenced in the discussion was foreign exchange-denominated contributions, part of a broader effort by PenCom to modernize the system and make it more responsive to the needs of contributors in a changing economy. While operational details were not fully outlined in the interview, the mention signals the regulator’s interest in developing more flexible products that reflect the realities of income diversification and cross-border financial exposure.
On consolidation, Akintola said expectations of a wave of mergers and acquisitions following the recapitalization announcement may have been overstated. Although the combination involving Premium Pension and Trustfund Pensions has drawn attention as a significant post-announcement deal, he said he does not expect a large number of similar transactions before the deadline.
His reasoning is that pension fund administration remains a highly attractive business, making many shareholders reluctant to give up ownership. As a result, while one or two additional deals may still emerge, he said the market is unlikely to see a broad consolidation rush.
That assessment suggests recapitalization may ultimately produce a more nuanced outcome than initially expected: stronger balance sheets and compliance adjustments across the sector, but not necessarily a dramatic reduction in the number of operators.
Overall, the amendment of the Pension Reform Act appears to be part of a wider attempt to reposition Nigeria’s pension industry for its next phase of growth. With assets rising, investment rules being revisited and inclusion initiatives expanding the potential contributor base, the sector is increasingly being viewed not just as a retirement savings system but as a critical source of long-term capital for the broader economy.
For investors, operators and policymakers alike, the central question will be whether the ongoing reforms can strike the right balance between innovation, prudence and market development. If they do, Nigeria’s pension industry could emerge from this period not only larger, but more influential in shaping the country’s financial future.