Nigeria’s pension regulator, the National Pension Commission, has raised investment limits for ordinary shares across RSA Funds I, II, III and VI-Active, a move analysts say could channel nearly N1tn into the country’s equities market.

A thematic report by CardinalStone Research said the adjustment addresses implementation challenges linked to the Revised Regulation on Investment of Pension Fund Assets issued in September 2025, particularly constraints around limits on equities, Federal Government bonds and alternative assets.

Limited eligible instruments in the alternatives space had left pension fund administrators with excess liquidity and underutilised allocation caps.

Sector data also showed Fund II nearing the previous 25 per cent ceiling, while Fund III had already breached it, with early-2026 market gains likely pushing portfolios closer to regulatory limits.

Assuming the pension industry sustains the 21.9 per cent asset growth recorded in 2025, CardinalStone outlined three utilisation scenarios for the newly created headroom in 2026:

  • 50% deployment: about N989.51bn in potential equity inflows.

  • 30% deployment: roughly N593.71bn.

  • 80% deployment: up to N1.58tn.

The firm said the policy could reinforce bullish sentiment in a market supported by attractive valuations, growth expectations, exchange-rate stability and moderating inflation, while positioning pension funds as a key driver of equity performance.

Another investment house, Comercio Partners, argued that heavy pension exposure to government securities has historically financed fiscal deficits at the expense of private-sector expansion and contributor returns.

It described the revised equity limits as a pragmatic shift that could redirect long-term domestic savings into corporate investment, potentially easing sovereign borrowing pressure, lowering yields and improving retirement outcomes through stronger real returns.

Greater pension participation in equities, the firm added, may deepen market liquidity, enhance price discovery, reduce volatility and encourage new listings, particularly among mid-cap and growth-oriented companies.

Comercio cautioned that rapid or excessive inflows could concentrate investments in a few large-capitalisation stocks, inflate valuations and expose pension assets to market swings, underscoring the need for robust risk management and regulatory oversight.