Sharia pension fund doubles in 2025 as contributions hit N218.8bn

Nigeria’s non-interest pension window recorded one of the strongest performances in the country’s retirement savings industry in 2025, as the Sharia-compliant Fund VI more than doubled in size within 12 months.

Contributions surged to N218.8 billion by year-end, reflecting a 126 per cent increase and signalling rising demand for ethical, non-interest retirement investment options.

“Overall, contributions to the fund increased by approximately 126 percent over the course of 2025, highlighting rising adoption of Sharia-compliant pension products and sustained contributor confidence in ethical and non-interest investment options, says analyst at Pension Fund Operators Association of Nigeria (PenOp).

The numbers tell a compelling story of accelerated growth. Contributions rose sharply from N96.69 billion in January to N134.46 billion by April, representing a 39 per cent increase within just four months.

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The upward trajectory continued through the year, climbing to N181.23 billion in August before closing at N218.84 billion in December. In full-year terms, the fund expanded by approximately 126 per cent, more than doubling within 12 months.

The surge reflects rising awareness and acceptance of Sharia-compliant retirement savings options, particularly among Nigerians who previously hesitated to participate in conventional interest-based pension funds, the analyst said.

Fund VI operates strictly on non-interest principles, avoiding investments in sectors such as alcohol, gambling, and interest-bearing financial instruments. Instead, assets are allocated to Sukuk, Sharia-compliant equities, and other ethically screened investments.

For many contributors, especially in northern Nigeria this framework removes a long-standing religious and ethical barrier to participating in the formal pension system, bringing more citizens into structured retirement savings.

The growth momentum is also closely tied to PenCom’s strategic regulatory push to broaden inclusion and strengthen confidence in non-interest products.

In recent years, the Commission has reinforced guidelines governing non-interest funds, ensured transparency in Sharia advisory governance structures, encouraged Pension Fund Administrators (PFAs) to actively promote Fund VI, and intensified awareness campaigns around fund choice options.

By embedding Fund VI within the mainstream pension framework as a fully regulated option, the Commission has effectively normalised Sharia-compliant finance within Nigeria’s retirement savings architecture.

PenCom in early 2025 inaugurated the Pension Industry Non-Interest Advisory Committee (PINAC) to enhance the development of non-interest pension funds in Nigeria.

Speaking at the inauguration held in Abuja, Omolola Oloworaran, director-general of PenCom, emphasised the significance of this initiative in deepening financial inclusion and expanding ethical pension offerings within the industry.

According to Oloworaran, the establishment of the advisory committee reflects PenCom’s commitment to fostering innovation, inclusivity, and sustainability in pension administration.

She highlighted the increasing demand for non-interest financial products, driven by a growing awareness of ethical finance principles and the need for alternative investment avenues.

“The Rationale for the Non-Interest Advisory Committee is clear. In recent years, we have witnessed increasing demand for non-interest financial products, driven by a growing awareness of ethical finance principles and the need for alternative investment avenues.

“The introduction of Non-Interest Pension Funds (Fund VI) was a ground breaking step in this direction, providing an investment option that is free from interest-based instruments while still ensuring competitive returns for contributors,” She stated

According to her, the development of this segment requires structured guidance, expert insights, and collaborative strategies to navigate regulatory, operational, and market challenges. “This is precisely why we have established this Advisory Committee to serve as a think tank, providing recommendations on best practices, governance structures, product development, and compliance with non-interest finance principles,” Oloworaran added.