Insurance industry braves odds – The Nation Newspaper

Despite economic headwinds and persistent public skepticism, Nigeria’s insurance industry showed renewed signs of life in 2025. This review takes a closer look at how both the regulator and operators have fared and what still needs fixing. Omobola Tolu-Kusimo writes.

Nigeria’s pension sector anchored by the Contributory Pension Scheme (CPS) under the Pension Reform Act (PRA) 2014 continues to demonstrate resilience and gradual progress.

While total assets and membership have grown significantly in recent years, long standing structural gaps and implementation shortfalls remain key concerns for stakeholders.

In 2025, Nigeria’s pension assets under management experienced continued expansion, building on momentum from previous years.

The industry during the period under review was led by a new Director-General, National Pension Commission (PenCom) Ms Omolola Oloworaran, who was appointed on July 13, 2024 and confirmed by the Senate by November 21.

By January 2025, total pension assets rose to about N22.9 trillion, marking a 17per cent year on year increase and reflecting positive contributions and market performance.

By May 2025, assets climbed further to N24.10 trillion, as funds maintained steady monthly growth.

In June and August 2025, contributions and strategic rebalancing pushed pension Asset under Management (AUM) to at least N24.63 trillion and N25.9 trillion, respectively.

By October 2025, total pension assets hit approximately N26.66 trillion, underscoring resilience amid economic headwinds.

The upward trajectory of pension assets reflects consistent employer and employee contributions, improved investment allocations, and confidence in the CPS framework from institutional investors.

Membership numbers have also grown. By Q3 2024, there were more than 10.5 million Retirement Savings Accounts (RSAs) substantially up from earlier years and continued registration in 2025 is expected to push these figures higher.

Developments/achievements

There has been sustained asset growth in the past one year. The consistent growth in AUM demonstrates that the industry continues to mobilize long term savings effectively, turning contributions into significant capital pools that can support investment and retiree benefits.

Advertisement

Similarly, the industry witnessed improved investment returns. Some pension fund administrators (PFAs) delivered strong returns across RSA fund types, particularly in growth oriented funds that benefit from equities and fixed income instruments managed for stability and long term gains.

PenCom on its part introduced revised investment regulations to guard assets and diversify investment portfolios, including clearer rules on allowable asset classes and risk management.

Besides, micro pension initiatives aimed at informal sector workers have seen 51per cent growth in enrolment, though coverage remains limited relative to the informal workforce.

The Pension Fund Operators Association of Nigeria (PenOp), Chief Operating Officer (COO), Anthonia Ifeanyi-Okoro praised digital reforms, specialized projects, and leadership efforts as steps toward a more vibrant and sustainable pension’s ecosystem.

Challenges

While industry fundamentals have strengthened, several issues persist ranging from low overall penetration, low informal sector coverage, state compliance issues, inflation impact on pension returns, retirement experience, among others.

Nigeria’s pension penetration relative to the working population and Gross Domestic Product (GDP) remains modest. Large segments of the workforce especially in the informal sector of the economy remain outside the CPS, despite initiatives like micro pension plans.

On informal sector coverage, although there is growth in micro pension participation, the informal sector which constitutes an over 90per cent of Nigeria’s workforce remains undercovered.

This highlights a gap between policy intention and operational inclusion.

Several states have lagged in fully implementing the CPS, meaning many pensioners may not receive consistent benefits as designed by the 2014 Act. This reflects a need for stronger enforcement and political consensus.

Although assets have grown, returns particularly real returns net of inflation remain a concern for many contributors approaching retirement, especially where heavy dependence on government securities limits exposure to higher growth instruments.

Meanwhile, reports from retirees in some quarters indicate delays or inadequate benefit adequacy, issues tied to legacy challenges and uneven implementation across regions and employer groups.

Oloworaranm while reeling out her achievement for the year titled: “A 365-Day Scorecard” said: “One year ago, I was confirmed as Director General of PenCom with a clear mandate: to rebuild trust, expand coverage, strengthen governance, and move the Contributory Pension Scheme firmly into its next phase.

 “I am proud to say that this past year has been defined by bold decisions, structural reforms, and measurable impact. We formally launched Pension Revolution 2.0, the most comprehensive reform agenda in the Nigerian pension industry since 2004. This was not cosmetic reform. It was structural. It brought together new regulations, stronger supervision, governance reforms, digital transformation, and industry realignment, all designed to future- proof the pension system and position it as a pillar of national stability and long-term development.

“One of the most historic milestones of the year was the Presidential approval and disbursement of N758 billion to settle outstanding pension liabilities. This unprecedented intervention sent a clear and powerful signal that Nigeria honours its promises to its workers and retirees. We also cleared long-standing pension increase backlogs for Federal Government treasury-funded retirees, some dating as far back as 2007. What many believed would never be paid has now been paid.

Advertisement

“In addition, zero waiting time for the payment of accrued pension rights was restored with effect from July 2025. Today, retirees receive their benefits when due, not months or years later. To further enhance benefit adequacy, we introduced Pension Boost 1.0, which has already added N2.68 billion to monthly pension payments for CPS retirees. These are not just numbers. They are meals on tables, medicines purchased, and dignity preserved.”