PenCom RSA Reform Boosts Nigerian Equities, Capital Market Growth

By Ayo Susan

The Group Chief Executive Officer of United Capital Plc, Mr. Peter Ashade, recently said at the firm’s maiden Investor Relations Roundtable in Lagos that the revised National Pension Commission (PenCom) Retirement Savings Account (RSA) investment guidelines could channel more than N2 trillion into the Nigerian equities market. He said the higher equity allocation limits for Retirement Savings Account Funds I, II, III and VI-Active would increase pension fund participation, improve market liquidity and provide long-term funding for listed companies. Ashade linked the opportunity to broader capital market reforms and presented United Capital’s H1 2026 financial performance, which showed gross earnings of N37.49 billion, profit before tax of N24.78 billion and profit after tax of N21.10 billion.

DECISION HIGHLIGHT

The PenCom’s revised investment framework shifts pension policy from capital preservation alone towards deeper domestic capital formation by expanding institutional participation in Nigerian equities.

DECISION MEMO

The reform’s significance lies less in the revised allocation limits than in its potential to reshape the structure of Nigeria’s capital market. With pension assets approaching N30 trillion, modest changes in equity allocation create substantial capacity for long-term institutional investment, reducing reliance on short-term capital and improving market depth.

Ashade said: “The revised RSA Fund investment guidelines present a major opportunity for deeper capital market participation by pension fund administrators, potentially improving liquidity and providing long-term funding support for listed companies.”

The revised framework also aligns with complementary reforms, including the T+1 settlement cycle, banking recapitalisation and foreign exchange liberalisation. Together, these measures strengthen the infrastructure for institutional investing while positioning the Nigerian Exchange for greater liquidity and more efficient price discovery.

For United Capital, the policy creates commercial opportunities across asset management, securities trading, investment banking and digital wealth management, supported by strong earnings momentum across its businesses.

DATA BOX

• Potential pension inflows into equities: Over N2 trillion
• Nigeria pension assets under management: Nearly N30 trillion
• Domestic pension equity holdings: N5.46 trillion (March 2026), from N3.96 trillion (end-2025)
• Revised equity allocation limits:
  • Fund I: 35 percent, from 30 percent
  • Fund II: 33 percent, from 25 percent
  • Fund III: 15 percent, from 10 percent
  • Fund VI-Active: 33 percent, from 25 percent

United Capital H1 2026

• Gross earnings: N37.49 billion, up 58 percent
• Profit before tax: N24.78 billion, up 80 percent
• Profit after tax: N21.10 billion, up 77 percent
• Earnings per share: N2.34, up 75 percent
• Cost-to-income ratio: 44 percent, from 50 percent
• Interim dividend: 30 kobo per share
• Managed funds: N1.04 trillion
• Shareholders’ funds: N187.09 billion, up 25 percent

WHO WINS / WHO LOSES

Winners

• Listed companies seeking long-term domestic capital
• Pension Fund Administrators with greater portfolio flexibility
• Investment banks, asset managers and securities firms
• Long-term equity investors through improved market liquidity

Losers

• Markets dependent on short-term speculative liquidity
• Asset classes competing for institutional capital where investment options remain limited

POLICY SIGNALS

• Pension policy is increasingly supporting domestic capital market development.
• Institutional investors are expected to play a larger role in financing corporate growth.
• Capital market reforms are becoming more coordinated across regulation, settlement infrastructure and market liquidity.

INVESTOR SIGNAL

The revised RSA guidelines strengthen the medium-term outlook for Nigerian equities by expanding the pool of patient institutional capital. Financial services firms with significant exposure to asset management, securities trading and investment banking are positioned to benefit from higher transaction volumes and growing assets under management.

RISK RADAR

• Slower-than-expected portfolio reallocation by Pension Fund Administrators
• Equity market volatility affecting pension allocation decisions
• Limited supply of fundamentally strong listed companies to absorb new capital
• Regulatory or macroeconomic changes that could weaken investor confidence or delay market deepening