Pension Regulator Hikes PFAs Capital Requirement by 900%
The National Pension Commission (PenCom), the industry regulator, has raised the minimum threshold for Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) by 900% from ₦2 billion to ₦20 billion.
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 ₦500 billion and above must now maintain a capital base of ₦20 billion plus 1% of the excess AUM beyond ₦500 billion.
It said that the move is aimed at strengthening financial stability and operational resilience. PFAs with AUM below ₦500 billion are also required to meet the new ₦20 billion minimum. 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,” 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.”
The revised capital requirements for both PFAs and PFCs will take effect immediately for new licenses, while existing operators have until December 31, 2026, to comply.
PenCom will monitor compliance every two years based on audited financial statements, and any shortfall must be rectified within 90 days.
PenCom emphasised that the review is anchored in Sections 60(1)(b), 62(b), and 115(1) of the Pension Reform Act (PRA) 2014. It aims 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 will be measured as Shareholders’ Fund unimpaired by losses, less the Statutory Reserve Fund. Zenith Bank Surges after Interim Dividend Notice, YTD Return Rises
