Lagos, Nigeria – The National Pension Commission (PenCom) has released a revised regulation on the investment of pension assets, allowing Pension Fund Administrators to increase their allocation to equities across four RSA fund categories in a move that could unlock significant liquidity for the domestic stock market.
Okay News reports that analysis of PenCom’s industry report as of December 2025 suggests the revised limits could translate to approximately N1.6 trillion in incremental investment capacity for Nigerian equities, assuming PFAs gradually adjust allocations toward the new thresholds.
RSA Fund I equity allocation increases to 35 percent from 30 percent, while RSA Fund II rises to 33 percent from 25 percent. RSA Fund III increases to 15 percent from 10 percent, and RSA Fund VI is revised upward to 33 percent from 25 percent.
The revision addresses imbalances in the pension system where limited availability of qualifying alternative asset instruments constrained portfolio allocations, leading to underutilised limits and excess liquidity.
This development comes at a favourable time for the market. The NGX All Share Index has already gained 25.3 percent year-to-date as of February 20, building on exceptional 2025 performance when the market delivered returns exceeding 50 percent.
The rally has been largely driven by strong performance in large-cap stocks such as MTN Nigeria, Seplat Energy, and Dangote Cement, reflecting renewed investor confidence and improved earnings visibility.
The revised regulation coincides with improving macroeconomic fundamentals including moderated inflationary pressures, stabilised foreign exchange conditions, and strengthened business activity indicators.
After an extended period of elevated yields driven by monetary tightening, fixed income returns have begun to moderate, making equities relatively more attractive for long-term institutional investors seeking real returns above inflation.
For pension funds operating with long-duration liabilities, this shift in relative attractiveness can influence portfolio rebalancing decisions.
Even a gradual movement toward the revised equity limits could provide structural demand support for the market.
Many listed companies recorded improved margins in 2025, supported by pricing adjustments, operational efficiencies, and improved revenue growth in a more stable macro environment.
As earnings improve, dividend declarations in 2026 are expected to remain robust, with attractive dividend yields enhancing the appeal of blue-chip equities.
Unlike short-term speculative flows, pension capital is typically stable and long-term in nature, which could enhance market depth and reduce volatility over time.
The revised regulation represents a structural catalyst that could reshape liquidity dynamics within the Nigerian equities market. Sustained pension inflows combined with improving macroeconomic fundamentals position the market for continued strength. The estimated N1.6 trillion in potential additional allocation capacity from pension inflows could help the market potentially surpass last year’s performance if stability is sustained.
 has released a revised regulation on the investment of pension assets, allowing Pension Fund Administrators to increase their allocation to equities across four RSA fund categories in a move that could unlock significant liquidity for the domestic stock market.){kind=link}