The National Pension Commission has extended its regulatory forbearance to allow Pension Fund Administrators to invest pension assets in a wider range of securities issued by the parent companies or holding companies of their respective Pension Fund Custodians.
The commission said the 24 month extension was introduced to reflect current market realities, including limited domestic investment options and operational constraints affecting pension fund managers.
In a circular dated July 3, 2026, and signed by the Director of the Surveillance Department, A. M. Saleem, PenCom said the temporary relief would remain in force for two years.
The commission said the measure was designed to broaden the investment universe, improve portfolio flexibility, strengthen diversification and help PFAs generate better risk adjusted returns for Retirement Savings Account holders.
PenCom, however, stressed that the forbearance does not amount to a relaxation of investment discipline or fiduciary standards.
It said every investment involving custodian related entities must be assessed with the same level of prudence required for all pension investments.
The commission warned that a relationship between a security issuer and a pension fund custodian must not create preferential treatment.
It directed that all transactions must be carried out on an arm length basis and at prevailing market terms, while warning that governance safeguards cannot fully remove correlation and contagion risks.
Under the framework, PFAs may invest only in equities and financial instruments issued by custodian parent companies that are licensed financial institutions regulated by the Central Bank of Nigeria, publicly quoted on a Securities and Exchange Commission recognized exchange and able to demonstrate financial soundness.
Such companies must also show a record of profitability, dividend payment, regulatory compliance and absence of unresolved enforcement actions.
PenCom placed limits on exposure across RSA fund categories. For ordinary shares, investments in custodian parent companies are capped at one per cent for Funds I, II, V Growth and VI Active, while Funds III, IV, V Conservative and VI Retiree may invest up to three per cent.
For bonds, exposure is limited to three per cent for Funds I, II, V Growth and VI Active, and five per cent for Funds III, IV, V Conservative and VI Retiree.
The commission also ruled that the combined exposure of an RSA fund to equities and bonds issued by the parent company of a custodian must not exceed five per cent of the portfolio consolidated net asset value.
Overall exposure to all securities issued by a custodian parent company, including money market instruments, must not exceed 10 per cent of consolidated net asset value.
No PFA may subscribe to more than 20 per cent of any bond issue rated A or above, while participation in bonds rated BBB is capped at 15 per cent.
The commission said all such investments must be reviewed independently by the Investment Committee, Risk Management Unit and Compliance Department of the PFA.
The Risk Management Unit must certify that the investment will not create excessive concentration, liquidity or correlation risks, while the Compliance Department must confirm full legal and regulatory compliance.
PFAs are also required to maintain a formal register for all investments involving custodian linked entities, including details of relationships, decision makers, conflict declarations and mitigation measures.
Officials with overlapping affiliations to the issuer or custodian group must disclose such interests and step aside from the approval process. PenCom directed PFAs to submit quarterly reports on all holdings in custodian parent companies and notify the commission within 48 hours of any exposure limit breach or any sign of financial distress involving a custodian parent company
