The House of Representatives has proposed a 20% investment cap for trust funds to protect beneficiaries from excessive market risks. The move is part of a legislative effort to overhaul the current regulatory framework governing how trustees manage assets.
The proposed Trustee Investment Bill, 2026, seeks to modernise Nigeria’s 1957 trustee investment law, which has remained largely unchanged for nearly seven decades. The bill aims to provide a more robust legal structure that balances the need for modern financial growth with strict accountability.
By introducing this investment ceiling, lawmakers intend to prevent trustees from over-exposing beneficiary assets to high-volatility financial instruments. This protection is intended to safeguard the long-term interests of individuals and organisations that rely on these funds for security and wealth preservation.
Modernising the 1957 trustee investment law
The current legal framework, established in 1957, does not account for the complexities of the contemporary financial landscape. Under the existing laws, trustees face significant limitations in accessing newer, more diverse financial instruments that are essential for effective wealth management in a modern economy.
The new bill seeks to bridge this gap by allowing for the inclusion of modern financial tools while simultaneously tightening the rules around how those tools are used. The proposed 20% cap serves as a primary safeguard, ensuring that a substantial portion of trust assets is not tied up in speculative or high-risk ventures that could lead to catastrophic losses for beneficiaries.
In addition to the investment cap, the legislation focuses on strengthening accountability. Trustees will be required to adhere to stricter reporting standards and transparency measures to ensure that all investment decisions are made in the best interest of the beneficiaries they serve.
The implementation of this bill is expected to impact several key players in the Nigerian financial sector, including pension fund administrators, estate managers, and corporate trustees. While the bill offers the potential for better asset growth through modern instruments, the 20% limit will mandate a more disciplined approach to risk management.
The bill is currently moving through the legislative process and is expected to undergo further scrutiny by House committees before being sent to the Senate for consideration.
Explore more News stories from Business Elites Africa.
