PenCom Unveils Revised Pension Investment Rules
By Patience Ikpeme
The National Pension Commission (PenCom) has released a revised Pension Investment Regulation, giving Pension Fund Administrators (PFAs) more opportunities to invest pension funds in new areas while ensuring better protection for contributors’ savings.
The new rules broaden the range of investments that PFAs can make. Pension funds can now be placed in instruments such as reverse repos, which are securities bought with an agreement to sell back later, and gold receipts, which are tradable on recognised exchanges and give exposure to gold without physical storage.
The regulation also allows for securities lending, private issuance by registered corporate entities, derivatives strictly for risk management purposes, and commodity-backed instruments linked to oil, gold and agricultural products.
In addition, agriculture investment funds covering debt securities, equities and infrastructure projects within the agricultural value chain have been introduced.
PenCom also reviewed the limits on how much can be invested in different sectors. The proportion of funds that can go into Federal Government Securities has been reduced across all funds, with more room created for asset-backed instruments.
Investment limits for infrastructure funds have been increased in line with the Commission’s strategy to promote investment in projects that support growth and provide a hedge against inflation.
A new cap has also been set to prevent PFAs from investing more than 25 percent of their funds in instruments issued by a single company across the six fund categories under the Multi-Fund Structure.
The revised regulation further brings together clear operational guidelines for non-interest investments and co-investments of pension funds by PFAs. It also makes it compulsory for PFAs and Closed Pension Fund Administrators (CPFAs) to consider environmental, social and governance (ESG) factors when making investment decisions.
The Commission said this measure is aimed at promoting responsible investing, inclusive growth and long-term allocation to sectors that support sustainable national development.
PenCom explained that the update also comes with new and clearer definitions of terms, including changes relating to Fund VI, also known as the Ethical Fund, in order to improve transparency and ensure stricter regulatory compliance.
According to the Commission, the revised rules are expected to strengthen the role of pension funds in national development while safeguarding contributors’ savings through safer, more diverse and transparent investment choices.
