PenCom Raises Pension Managers' Capital Base to ₦20bn

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The National Pension Commission (PenCom) has raised the minimum capital requirement for Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) to ₦20 billion from ₦2 billion.

It said the revised capital requirements are to take effect immediately for new licences, while existing operators have until December 31, 2026, to comply.

The commission announced the new threshold in a circular titled ‘Revised Minimum Capital Requirements for Licensed Pension Fund Administrators and Pension Fund Custodians’ posted late on its X handle on Friday, September 26.

It stated that PFAs with assets under management (AUM) of ₦500 billion and above must now maintain a capital base of ₦20 billion plus one per cent of the excess AUM beyond ₦500 billion.

The move, according to the pension regulator, is aimed at strengthening financial stability and operational resilience.

PFAs with AUM below ₦500 billion are required to meet the new ₦20 billion minimum.

It stated further that special-purpose PFAs, such as NPF Pensions Limited, must hold ₦30 billion, while the Nigerian University Pension Management Company Limited is required to maintain ₦20 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.
“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,” PenCom maintained.

For PFCs, the minimum capital requirement is raised from N2 billion, unchanged since 2004, to N25 billion plus 0.1 per cent of AUC.

PenCom 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 commission noted that the operating landscape of the PFC business has evolved significantly over 21 years.

“These developments underscore the need to reassess the adequacy of the existing capital threshold to ensure continued financial stability and effective risk management,” PenCom stressed.

According to PenCom, it will monitor compliance every two years based on audited financial statements, and any shortfall must be rectified within 90 days.

It cited that the review is anchored in Sections 60(1)(b), 62(b), and 115(1) of the Pension Reform Act (PRA) 2014.

It said it aimed to support the long-term viability of pension operators, improve service delivery, and ensure the sustainability of the Contributory Pension Scheme (CPS), which has now been in operation for 21 years.

“PFAs are therefore required to maintain adequate capital to sustain the achievements of the CPS, support ongoing pension reform initiatives, and deploy adequate resources to effectively fund operations,” PenCom stated.

The revised capital is to be measured as the shareholders’ fund unimpaired by losses, less the statutory reserve fund, PenCom added.

Pinnacle Daily reports that apex regulators in the financial services are initiating capital raising for operators in the sector to strengthen financial stability and operational resilience and to position the institutions ahead of the federal government of Nigeria’s ambitious $1 trillion economic growth by 2023.

The Central Bank of Nigeria (CBN), as well as the National Insurance Commission (NAICOM), have mandated the banks and insurance companies to raise their capital, giving deadlines for full compliance.

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