Nigeria Pension Funds Increase Exposure to Government Securities Amid Rising Yields

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Pension assets invested in Federal Government of Nigeria debt instruments recorded a significant increase, rising by 16.9 percent year on year to N16.925 trillion in February 2026, up from N14.468 trillion in the same period of 2025. This is according to new data released by the National Pension Commission.

The report also showed that total pension Net Asset Value grew by 28.7 percent year on year to N29.426 trillion, driven largely by higher yields on government securities. Analysts say the trend reflects growing investor confidence in sovereign debt instruments amid prevailing market conditions.

Further breakdown of the data indicates that Federal Government bonds accounted for 57.5 percent of total pension assets, valued at approximately N16.92 trillion as of February 2026. The heavy allocation to government securities is largely influenced by regulatory guidelines set by the commission, which encourage Pension Fund Administrators to prioritize low risk investments.

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Investment in treasury bills also surged, rising by 41.2 percent year on year to N987.025 billion. This increase highlights renewed appetite for short term government instruments, particularly in a high interest rate environment.

However, investments in Sukuk bonds recorded a slight decline, dropping marginally to N100.23 billion compared to N100.478 billion in the previous year.

Market analysts, including experts at InvestData Consulting Limited, attribute the upward trend to increased government borrowing aimed at financing budget deficits, alongside attractive returns on fixed income securities.

Similarly, financial analyst David Adonri noted that government securities remain appealing due to their safety, liquidity, and relatively higher yields compared to other low risk options. He added that as pension fund assets continue to grow, a larger share is naturally channeled into Federal Government instruments.

The outlook suggests that this trend will persist, supported by regulatory requirements and the need for le investment options in an evolving economic landscape.