Nigeria’s youthful pension contributors fuel next pool of patient capital

…..75% of pension enrollees less than 40 years of age

Nigeria’s pension system is increasingly becoming a long-term investment engine as younger workers account for the bulk of new entrants into the Contributory Pension Scheme (CPS), creating a growing pool of capital that could be deployed beyond government securities into infrastructure, housing, and other productive assets for longer durations.

Data from the National Pension Commission (PenCom) show that 75.31 percent of new Retirement Savings Accounts (RSAs) opened in the first quarter of 2026 belonged to Nigerians below 40, underscoring the unusually long investment horizon available to pension fund operators.

Omolola Oloworaran, director-general of PenCom, described the age profile as the system’s “single most important long-term asset”, noting that the retirement horizon of much of the new contributor base extends beyond 2055.

The implication is significant for Nigeria’s capital market and economy. Unlike short-term savings, pension contributions are designed to remain invested for decades, enabling Pension Fund Administrators (PFAs) to provide the patient capital needed to finance assets whose returns accrue gradually over long periods.

“Investment policy should be calibrated to this reality,” Oloworaran said. “Long horizons justify, and indeed require, more risk-bearing capacity than the current 58.07 percent allocation to Federal Government securities reflects.”

The first quarter 2026 data show that 143,248 new RSAs were opened during the quarter, taking cumulative registrations from 11.04 million at the end of 2025 to 11.18 million.

The age distribution is particularly revealing. Nigerians below 30 accounted for 57,256, or 39.97 percent, of new registrations, while those aged 30 to 39 accounted for another 50,622, or 35.34 percent.

Together, the two groups represent the overwhelming majority of new entrants and, importantly, workers with decades of contributions ahead of them.

For PFAs, this presents an opportunity to think beyond the traditional preservation of capital towards long-term real returns that can compound over several decades, says Chika Onwunali, partner at Premium Debate.

A younger contributor can potentially tolerate greater short-term market volatility because retirement is still far away, Onwunali stated, noting that this creates room, subject to regulation and prudent risk management, for pension funds to increase exposure to productive assets capable of generating higher long-term returns than relatively low-risk fixed-income instruments.

“That could include infrastructure funds, real estate investment trusts, mortgage-backed securities, private credit, renewable energy projects and other vehicles structured to match pension funds’ long-dated liabilities.”

Anthonia Ifeanyi-Okoro, chief executive officer of the Pension Fund Operators Association of Nigeria (PenOp), described the country’s pension pool as one of its most underleveraged economic assets.

Nigeria’s pension industry currently manages about N30.94 trillion in assets, backed by more than 11.23 million registered contributors, according to Ifeanyi-Okoro.

She said the same capital currently financing government borrowing could also support affordable housing, infrastructure and deeper capital-market development.

“The same capital financing government borrowing could also be financing affordable housing at scale, contributing to infrastructure, deepening Nigeria’s capital markets, and funding the long-term investments that create jobs and raise living standards,” she said.

For Nigeria, this could help bridge part of the country’s persistent infrastructure financing gap while giving pension contributors exposure to productive assets whose performance is linked to economic growth.

But unlocking this opportunity will require more than simply directing pension money into infrastructure, which, Ifeanyi-Okoro said, requires directing the instruments or channelling pension capital into the real economy, including mortgage-backed securities, REITs and infrastructure vehicles, either already exist or can be created.

“What is missing is the regulatory clarity, the market infrastructure, and the political will to activate them,” she said.

The gender profile of new contributors also points to a gradually broadening pension base. Women accounted for 44.08 percent of new Q1 registrations, compared with 55.92 percent for men, suggesting that the expansion of pension coverage is increasingly drawing from a wider segment of the workforce.

Yet the 11.18 million registered RSAs still represent only about 12.1 percent of Nigeria’s estimated 92 million labour force, according to PenCom’s report. The larger prize, therefore, lies in bringing millions of informal-sector workers into the CPS.

If that expansion continues while the existing contributor base remains predominantly young, Nigeria’s pension industry could accumulate an even larger reservoir of long-duration capital.

The challenge for regulators and PFAs is to ensure that this capital is not merely large, but productive, earning competitive risk-adjusted returns for contributors while helping finance the infrastructure and businesses needed to expand Nigeria’s economy, industry analysts said.

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