Nigeria’s pension assets reached ₦26.66 trillion in October 2025, with approximately 60%, or about ₦16 trillion, allocated to government securities. For the past 15 years, the real returns on these investments have generally been negative, meaning that while nominal balances grew, many retirement savers saw a decline in their purchasing power.
This trend is not isolated to Nigeria; similar challenges were noted across other nations, including Angola and Egypt. These countries also reported negative real returns, with over half of their pension assets invested in government bonds and bills. Recent adjustments to Nigeria’s pension fund equity allocation limits indicate a potential improvement, although these changes are modest compared to the scale of the issues faced.
Previously under the Consumer Price Index (CPI) methodology, a 91-day T-bill yielding 18% fell short against inflation, resulting in negative real returns. However, under the rebased CPI, a yield of 15% against an inflation rate of 15.15% appears neutral due to lower measured inflation, which raised questions about whether actual conditions have improved or simply how they are being assessed.
The data indicates that inflation has moderated, with monthly increases dropping below 1% during late 2025. Despite changes in calculation methods, the recent period from August 2025 to January 2026 showed six consecutive months of positive real returns, culminating in a notable +4.39% return in January 2026. This shift is significant, marking the first time in years that the real return index surpassed its base level.
While cash investments are no longer expected to erode purchasing power, the sustainability of this positive trend is uncertain.
Why this story matters:
- Highlights the challenges faced by pension investors, particularly in emerging markets.
Key takeaway:
- A recent shift has led to positive real returns for Nigerian pensions after years of negative growth.
Opposing viewpoint:
- Skeptics argue the improvement may be superficial and driven by methodological changes rather than genuine economic recovery.
