Pension Fund Investments in Fixed Income Securities Surge 17.7% to ₦2.4 Trillion Amid High Interest Rate Regime
Investments in fixed income securities by Nigeria’s pension fund administrators (PFAs) rose by 17.7 percent year-on-year to ₦2.405 trillion in the eight months ended August 2025, up from ₦2.043 trillion in the same period of 2024, according to the latest National Pension Commission (PenCom) industry portfolio report.
The report, which detailed pension fund investment activities as of August 31, 2025, showed that the increase was largely driven by the elevated Monetary Policy Rate (MPR) maintained by the Central Bank of Nigeria (CBN) over the past two years.
Fixed income or money market instruments under the period review include fixed deposits, bank acceptances, commercial papers, and foreign money market instruments.
Market analysts attributed the uptick in fixed income investment to the attractive yields offered by these instruments under the current high-interest-rate environment.
“The investment in money market securities by PFAs is necessary because of the attractive interest rate and also the less risky nature of the securities,” said David Adonri, financial analyst and Vice Chairman of Highcap Securities. “However, PFAs also need to diversify their investment portfolio in order to deliver higher returns for investors.”
The CBN’s MPR — the benchmark lending rate that influences yields on government and corporate debt instruments — had reached 27.5 percent earlier in the year before being slightly reduced to 27 percent last month, a move aimed at stimulating economic growth while maintaining inflation control amid a gradual disinflation trend.
According to PenCom’s data, money market securities accounted for 9.28 percent of total pension fund assets, valued at ₦25.895 trillion as of August 2025.
Within the fixed income category, traditional securities such as bank deposits and acceptances dominated, representing 77.8 percent of the total value at ₦2.405 trillion. They were followed by commercial papers, which stood at ₦226 billion or 9.4 percent, and foreign money market instruments, valued at ₦102 billion, representing 4.2 percent.
Analysts say the continued preference for fixed income investments highlights PFAs’ cautious stance amid economic uncertainties, particularly as inflation remains elevated and equity market volatility persists.
They, however, anticipate a gradual portfolio rebalancing if interest rates ease further and economic growth prospects strengthen in the coming quarters.