Pension Funds Get Golden Opportunity in PenCom’s New Reform

The National Pension Commission (PenCom) has introduced a landmark regulation allowing pension funds to invest in gold through tradable Gold Receipts listed on Securities and Exchange Commission-recognised exchanges. This innovation enables Pension Fund Administrators to gain exposure to gold without the complexities of physical storage, offering a secure and liquid alternative asset class.

The Gold Receipts are part of a broader reform aimed at diversifying pension fund portfolios, enhancing returns, and minimizing concentration risks. PenCom stated that the review aligns with its strategic objective of promoting impact investing and ensuring real returns for retirees.

Under the revised guidelines, pension funds can now invest in instruments such as Reverse Repos, Securities Lending with central counterparty guarantees, Private Issuances by registered corporate entities, and commodity-backed instruments linked to oil, gold, and agriculture. Derivatives including futures, forwards, options, and swaps are permitted strictly for risk management purposes.

PenCom has also adjusted allocation limits across key asset classes to rebalance risk and support long-term growth. Infrastructure Funds now enjoy increased allocation limits, while plain vanilla Federal Government Securities have been reduced, with asset-backed instruments offered as offsets.

The regulation introduces a consolidated framework for non-interest investments and co-investment models. It mandates PFAs to integrate Environmental, Social, and Governance (ESG) principles into their investment decisions, emphasizing responsible investing and inclusive growth. A new cap limits exposure to any single corporate issuer to 25% across the six funds within the Multi-Fund Structure.

This reform follows PenCom’s recent policy allowing Nigerians abroad and those earning in foreign currency to contribute to pensions in US dollars. The new framework, released in September 2025, expands the reach of the Contributory Pension Scheme and aligns Nigeria’s pension system with global standards. Licensed Pension Fund Operators are now authorized to manage foreign currency contributions under strict governance and operational requirements.