High interest rate, FG borrowings drive rise in pension investments

By Peter Egwuatu

Pension assets invested in the Federal Government of Nigeria, FGN, debt securities rose 17.5% Year-on-Year, YoY, to N17.479 trillion in May 2026 from N14.468 trillion in the corresponding period 2025, according to data from the National Pension Commission, PenCom.

Financial analysts said the development is driven by high interest environment in the financial market and sustained Federal Government (FG) borrowings.

The total pension Net Assets Value, NAV increased by 27.1%, YoY, to N31.322 trillion in May 2026 from  N24.654 trillion in the corresponding period 2025 on the back of rising yield on investments in FGN securities.

The PenCom data also reveals that FGN Bonds accounted for 55.8 per cent of total pension assets in May 2026. 

According to PenCom, the considerable proportion of government securities in the overall Asset Under Management AuM portfolio can primarily be attributed to PenCom regulatory limits on investments.

To further illustrate the renewed interest in government assets, pension investment in treasury bills increased by 86.9 % YoY to N1.131 trillion from N604.587 billion in May 2025.

However, the Sukuk Bonds, which comprises Hold Till Maturity, HTM, and Available for Sale, AFS, declined marginally YoY to N92.589 billion from N94.894 billion in May 2025.

Commenting on the report, analysts at InvestData Consulting Limited stated: “The interest rate, which  has been high and remained unchanged has been the major factor  and the government’s increased borrowing need to plug the 2025 budget deficit also drove the YoY growth”.

Commenting as well, David Adonri, analyst and Executive Vice Chairman at Highcap Securities Limited, stated: “The rise in demand for government securities is driven by their reputation as safe-haven assets, high liquidity, attractive yields compared to other low-risk options, and increased participation from both institutional and retail.   As the size of pension funds grows, obviously more of their investments will flow to FGNs.”

The post High interest rate, FG borrowings drive rise in pension investments appeared first on Vanguard News.