The National Pension Commission (PenCom) has raised the minimum capital for pension operators from N2 billion to N20 billion for Pension Fund Administrators (PFAs), N30 billion for the special-purpose PFAs, and N25 billion for Pension Fund Custodians (PFCs).
In a sweeping directive, the regulator announced that Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) must now bulk up their balance sheets if they intend to remain in business.
The new rule, which takes immediate effect for new entrants and has a compliance deadline of December 31, 2026, for existing players, was designed to make the industry sturdier, more resilient, and better equipped to safeguard the retirement savings of over 10 million Nigerian workers.
In a circular titled: “Revised Minimum Capital Requirements for Licensed Pension Fund Administrators and Pension Fund Custodians”, PenCom stated that PFAs with Assets Under Management (AUM) of N500 billion and above must now maintain a capital base of N20 billion plus 1% of the excess AUM beyond N500 billion.
It said that the move is aimed at strengthening financial stability and operational resilience.
PFAs with AUM below N500 billion are also required to meet the new N20 billion minimum.
Special Purpose PFAs, such as NPF Pensions Limited, must hold N30 billion, while the Nigerian University Pension Management Company Limited is required to maintain N20 billion.
“The capital requirement was reviewed in line with global best practice, which ensures that capital is proportionate to the risk exposure of the Pension Fund Operator,” PenCom stated.
“The new model aligned the capital requirement with the Pension Asset Under Management (AUM) and Assets Under Custody (AUC) of the PFAs and PFCs, respectively.”
For Pension Fund Custodians (PFCs), the minimum capital requirement has been raised from N2 billion, unchanged since 2004, to N25 billion plus 0.1% of AUC.
The commission cited the exponential growth in assets under custody and the increasing complexity of operations, including technology deployment, cybersecurity, and staff welfare, as key drivers of the revision.
“The operating landscape of PFC business has evolved significantly over 21 years,” the circular noted. “These developments underscore the need to reassess the adequacy of the existing capital threshold to ensure continued financial stability and effective risk management.”
Explaining the rationale behind the upward review, PenCom pointed to three major concerns: the rapid growth of pension assets in Nigeria, the increasing complexity of fund operations, and the need to keep pace with global best practices.
PenCom has given operators until December 31, 2026, to meet the new thresholds, a window that allows PFAs and PFCs’ time to recapitalise, restructure, or consider mergers and acquisitions. Compliance will be checked biennially, based on audited financial statements, and any shortfall identified must be rectified within 90 days.
Festus Akanbi
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