NLPC Pension: Good returns, but weak risk management
Nigeria’s pension funds are making steady gains, but a closer look shows that not all returns are created equal. In this first edition of Inside PFAs, we examine NLPC Pension
Nigeria’s pension funds are making steady gains, but a closer look shows that not all returns are created equal. In this first edition of Inside PFAs, we examine NLPC Pension Fund Administrators Limited and what its numbers really mean for contributors.
Between June and November 2025, NLPC Pension recorded consistent growth across its Retirement Savings Account (RSA) funds. RSA Fund I, which takes more risk, rose from 16.49 per cent to 18.52 per cent, before dropping slightly to 17.33 per cent in November.
RSA Fund II delivered returns between 12 and 13 per cent, while the more conservative Funds III and IV stayed within the 10 to 12 per cent range. Retiree funds also performed steadily, with Fund VI (Retiree) reaching 16.84 per cent.
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At first glance, this looks like strong performance. But an expert in the pension industry said returns alone do not tell the full story.
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To understand how well a pension fund is managed, it is important to look at how much risk is taken to achieve those returns. One common measure is the Sharpe ratio, which shows whether returns are worth the risk.
On this measure, NLPC Pension shows some weakness.
Most of its RSA funds recorded negative Sharpe ratios for much of the period. For example, RSA Fund II ended November at -1.53, while Funds III and IV were even lower at -2.34 and -3.85. Even Fund I, despite its high returns, slipped to -0.33.
In simple terms, this means the returns may not fully justify the level of risk taken.
Only RSA Fund V showed consistent strength on this measure, reaching 0.94 at one point. This suggests that while the company can manage some funds efficiently, that performance is not consistent across all portfolios.
A similar pattern appears in its other pension schemes.
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Some, like the NNPC Staff Pension Fund, performed strongly, reaching nearly 21 per cent returns. Others struggled. The FBN Legacy Pension Fund remained negative throughout the period, ending November at -5.80 per cent.
There are also concerns when looking at risk. The FBN Legacy Fund recorded a Sharpe ratio of -5.16, while the WAEC Staff Pension Fund dropped sharply to -11.60. These figures suggest poor risk management in those portfolios.
This wide gap between strong and weak funds raises questions about consistency.
For contributors, the key issue is simple: while returns are positive, they may be coming with more risk than necessary. This means contributors might not be getting the best value for their money.
The lack of clear and simple disclosure makes it harder to judge performance. While PFAs provide data, it is often too technical and not easy for the average contributor to understand or compare.
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Data from the National Pension Commission (PenCom) show that most pension funds benefited from high interest rates during the period. This suggests that part of the performance may be due to market conditions, not just skill.
NLPC Pension’s results reflect a wider issue in the industry: returns are improving, but questions remain about risk, consistency and transparency.
As pension assets continue to grow, contributors will need clearer information to understand not just how much they are earning, but how well their money is being managed.
