FG to Unlock N23 Trillion Pension Fund for Economic Revival Amid Manageable Challenges

The Federal Government is advancing plans to utilize Nigeria’s N23 trillion pension assets to accelerate economic growth and enhance development across key sectors.

At the 2025 Pension Industry Leadership Retreat in Lagos, Finance Minister and Coordinating Minister of the Economy, Mr. Wale Edun, underscored the need for strategic alignment of these funds with national priorities such as infrastructure, housing, energy, and digital innovation.

Nigeria’s pension system faces several challenges under both the Defined Benefit Scheme (DBS) and the Contributory Pension Scheme (CPS). The DBS, which guarantees fixed pension payments to retirees, has struggled with funding deficits, leading to delays in payments and a backlog of arrears. Many pensioners under this scheme have faced financial hardship due to inconsistent disbursements. Meanwhile, the CPS, introduced to ensure sustainability, has encountered issues such as low compliance by state governments, delays in remittance of contributions, and inadequate public awareness about its benefits.

To address these challenges, the Federal Government has taken decisive steps, including improving budgetary allocations for pension payments and enhancing regulatory oversight through the National Pension Commission (PenCom). One of the bold strategies being implemented is the issuance of a ₦758 billion bond to clear outstanding pension liabilities. This initiative aims to provide financial relief to retirees under the DBS while strengthening the pension system’s credibility.

Acknowledging the pension industry’s critical role in long-term economic stability, Edun highlighted that pension assets now account for approximately 8.6% of the country’s GDP. While celebrating the success of the Contributory Pension Scheme as one of Africa’s strongest savings systems, he also pointed out the need to improve pension penetration compared to global standards.

Pension funds have become a crucial tool for economic development across various nations, with notable successes in Africa and globally. Beyond West Africa, South Africa has demonstrated significant progress in pension fund utilization, with assets contributing approximately 57.44% of its GDP and playing a key role in infrastructure development and financial stability. Namibia has excelled even further, with pension funds accounting for 80.06% of GDP, strengthening economic initiatives and enhancing investment opportunities.

Recent economic indicators, including a 3.84% GDP growth in Q1 2025, along with enhanced foreign reserves and currency stability, reflect progress, but Edun emphasized the need for faster expansion to effectively tackle poverty. He stressed that achieving a minimum of 7% annual growth is essential to driving sustainable prosperity.

Several West African countries have successfully leveraged pension funds to drive economic growth and development. Ghana stands out as a notable example, with pension assets playing a crucial role in financing infrastructure projects and contributing to the country’s economic expansion. Côte d’Ivoire has also made significant strides, utilizing pension funds to support key sectors such as housing and energy, which have bolstered its GDP growth.

Edun reaffirmed President Bola Ahmed Tinubu’s commitment to fostering a resilient financial system that supports long-term national development. A statement from the Ministry of Finance reiterated the government’s readiness to collaborate with stakeholders in unlocking the full economic potential of pension funds, aiming to create new opportunities for expansion, job creation, and improved living standards.

Beyond core infrastructure areas, pension fund investments could significantly impact agriculture, healthcare, education, manufacturing, and transportation sectors. These investments would support modern farming techniques, expand medical facilities, fund educational institutions, enhance industrial production, and improve logistics networks across the country.

By strategically deploying pension funds, countries have reinforced economic resilience, created job opportunities, and expanded essential sectors such as housing, transportation, and energy. The successful integration of pension assets into national development policies has shown the potential to drive long-term prosperity while maintaining financial security for retirees.

For the initiative to succeed, transparency, strong governance, and clear exit strategies must be established. The government has also deployed the Enhanced Contributor Registration System (ECRS) to resolve database issues and ensure accurate pension records. Balancing investment opportunities with financial security will be essential in maintaining public trust while achieving sustainable economic growth. Pensioners need timely payments, while contributors and employers should experience tangible economic benefits without undue risks as the government pursues this ambitious economic strategy.