PenCom Raises RSA Fund Equity Limits, Paving Way for ₦2.18Trn Pension Inflows in 2026

The National Pension Commission (PenCom) has approved a significant upward revision to the equity allocation limits for Retirement Savings Account (RSA) Funds I, II, III, and VI-active, a move expected to unlock substantial liquidity into the Nigerian equities market.

The regulator cited practical constraints in deploying funds into alternative assets—including infrastructure, private equity, and agricultural investment funds—due to limited availability of qualifying instruments.

This limitation left pension fund administrators (PFAs) holding excess liquidity, constraining market activity. By raising the permitted allocation to ordinary shares, PenCom has effectively created a practical release valve, enabling PFAs to deploy idle funds into equities.

Higher Equity Ceilings

The revised maximum allocations are:
RSA Fund I: 35.0% (from 30.0%)
RSA Fund II: 33.0% (from 25.0%)
RSA Fund III: 15.0% (from 10.0%)
RSA Fund VI-active: 33.0% (from 25.0%)

The adjustment comes as allocation limits for RSA Funds were increasingly binding, with RSA Fund I and II approaching prior ceilings and RSA Fund III already exceeding its prior limit. The change is expected to improve the effectiveness of pension fund investments while supporting domestic market liquidity.

Projected Market Impact

PFAs are major institutional players in Nigeria’s capital markets, responsible for approximately 69% of domestic institutional gross market flows in 2025. The added equity headroom is expected to translate into increased buying activity, particularly in large-cap, liquid equities.

Cordros Research projects cumulative net inflows of ₦2.18 trillion into equities in 2026, lifting total pension equity holdings to ₦6.14 trillion by December 2026, a 55.2% year-on-year increase. At the fund level, projected equity holdings are:
Fund I: ₦185.52 billion (+68.2% y/y)
Fund II: ₦4.09 trillion (+58.2% y/y)
Fund III: ₦1.22 trillion (+67.1% y/y)
Fund VI-active: ₦74.31 billion (+109.7% y/y)
Immediate Market Reaction

The equities market responded positively to the announcement. The NGX All-Share Index (NGXASI) surged 1.6% on 10 February, marking its strongest single-day gain since early January 2026. Trading activity also spiked, with total value traded reaching ₦50.43 billion, the highest single-day turnover recorded in 2026 to date.

Looking ahead, the policy revision is expected to remain a tailwind for Nigerian equities, supporting market valuations and reinforcing institutional buying into the near to medium term.

PenCom increases equity allocation ceilings for RSA Funds I, II, III, and VI-active, freeing idle pension liquidity. The move is projected to inject ₦2.18 trillion into Nigerian equities in 2026, boosting market activity and institutional demand.