Pension payouts increase to ₦22.51Trn, become source of reliable income amidst harsh economic downturn

 

By allcitynews.blog 

Despite harsh economic downturn, high  rate of unemployment ravaging the country, pension accounts has become the most reliable form of wealth as pension fund grew to N22.51 trillion  within five years based on wise investment.

This was made known recently by the Director General of the Apex Pension Regulatory Authority, National Pension Commission (PENCOM) under Ms. Omolola Bridget Oloworaran, as her leadership continued to record landmark success.

According to her, PenCom industry is recording a landmark achievement, with assets under management (AUM) rising to ₦22.51 trillion as of December 2024,  a 22.65% increase year-on-year and a testament to five years of sustained sectoral growth. 

According to PenCom, the sector added ₦4.16 trillion in 2024 alone, underlining its growing role in stabilizing and financing the Nigerian economy.

The increase in pension assets and RSA enrollments, alongside a strong investment footprint in Federal Government securities, has placed the pension industry firmly at the heart of Nigeria’s development strategy. 

In 2019, Nigeria’s pension AUM stood just above ₦8 trillion. Five years later, the figure has nearly tripled. This upward growth, explained by officials, is largely due to increased compliance by employers, improved transparency in pension administration, and the adoption of data-driven regulatory practices by PenCom.

According to PenCom officials, “This level of growth speaks to the increasing trust Nigerians are placing in the Contributory Pension Scheme.  It also reflects the hard work of Pension Fund Administrators (PFAs) who have expanded coverage and improved service delivery.”

The total number of Retirement Savings Account (RSA) holders reached 10.58 million at the close of 2024, representing a 3.84% increase, or 390,899 new enrollees. However, this number remains modest in a country with over 70 million active workers.

Analysts note that most of the growth has come from the formal sector, with the informal segment, which includes artisans, informl workers, and SMEs, still grossly underrepresented.

Although only few Nigerian workers are saving for retirement based on the harsh economic situation which is reducing their monthly take-home to mere  peanuts money, some schools of thought are canvassing for more aggressive micro pension reforms and incentives to capture the informal economy.

Despite overall sectoral growth, PenCom’s report revealed a 16% decline in micro pension fund participation in 2024. Industry watchers attribute the drop to reduced disposable income, poor awareness campaigns, and lack of technological infrastructure for rural enrollment.

The Micro Pension Plan, launched in 2019 to cater to self-employed individuals and informal sector workers, has struggled to gain traction,  a worrying trend for efforts aimed at expanding financial inclusion.

The large share of pension funds continues to be invested in Federal Government of Nigeria (FGN) securities, including bonds and treasury bills. This strategy, widely considered safe and beneficial, helped fuel the ₦4.16 trillion growth in 2024.

According to Q4 data from PenCom, more than 60% of the AUM was allocated to FGN instruments, a key factor in ensuring capital availability for national projects, budget support, and public debt financing.

“This model provides dual value: it safeguards contributor funds while supporting the government’s infrastructural agenda,” said investment economist.

Not standing on the predecessors' achievement alone but Oloworaran and her team's role has brought rapid growth as the pension industry from where it was during economic downturns, especially following the COVID-19 pandemic, global inflation surges, and the domestic fuel subsidy removal in 2023. While other investment portfolios experienced volatility, pension funds remained relatively stable, with Fund I returns averaging 17.78% in 2024, according to Money Counsellors’ performance report.

For many contributors, their pension accounts became the most reliable form of wealth retention amidst rising inflation and naira depreciation.

PenCom data showed that ₦56.28 billion was paid out in 2024 to 31,803 jobless contributors, up from ₦35.48 billion in 2023. The increase in pension outflows is a clear signal of the country’s rising unemployment levels and the need for stronger job creation efforts.

Beyond individual security, the pension industry is increasingly being positioned as a pillar of national development. PFAs are channeling funds into infrastructure bonds, real sector equities, and developmental initiatives, especially in transport, agriculture, and healthcare.

In addition, the pension sector now serves as a major institutional investor on the Nigerian Exchange Group and the domestic bond market, contributing to overall financial market stability.

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