Pension Funds in Nigeria Can Now Invest in Foreign Assets, Says PenCom

PenCom now allows Nigerian pension fund administrators to invest in foreign exchange–denominated assets such as equities, bonds, and real estate, under strict guidelines to manage FX risk.

The National Pension Commission (PenCom) has announced the approval for pension fund administrators to invest in foreign exchange–denominated assets, a shift aimed at improving returns and protecting savings from devaluation. The policy change is expected to unlock new diversification opportunities for pension portfolios in Nigeria.

In a statement, PenCom said the new regulation permits pension schemes under the Contributory Pension Scheme (CPS) to allocate a portion of their assets to FX-denominated investments, including foreign equities, bonds, and real estate. The move is part of the commission’s broader reform agenda to boost pension yields and hedge against the local currency’s volatility.

PenCom clarified that strict limits and risk management guidelines will govern the investments. Each administrator must adhere to guidelines on maximum exposure, valuation rules, and compliance with foreign investment regulations.

The policy has been met with cautious optimism among industry stakeholders. Pension fund administrators (PFAs) express interest, seeing the potential for higher yields, while some financial analysts warn about foreign exchange risk and capital repatriation challenges. The regulation is expected to take effect after the final guidelines are released.

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