Abuja — The National Pension Commission (PenCom) has ordered Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) in Nigeria to significantly raise their minimum capital base by December 31, 2026, in a bid to enhance financial stability, improve risk management, and safeguard pension assets.
In a new circular, “REF: PenCom/INSP/Surv/2025/1255”, issued to all licensed PFAs and PFCs, PenCom announced that:
- PFAs must raise their minimum capital base from ₦5 billion to ₦20 billion.
- PFCs must raise theirs from ₦2 billion to ₦25 billion.
- NPF Pensions Limited, which manages police pensions, must raise its capital to ₦30 billion.
- The Nigerian University Pension Management Company Limited will now require ₦20 billion.
According to PenCom, the revised requirements align with global best practices and ensure capital adequacy is proportional to each operator’s risk exposure.
Why the Capital Base Was Increased
PenCom explained that since the last PFA capital review in April 2021, Nigeria’s pension industry has witnessed:
- Geometric growth in Assets Under Management (AUM).
- A more complex and challenging macroeconomic environment.
- The need for stronger risk management, cybersecurity, and technological upgrades.
The regulator emphasized that pension operators must deploy adequate resources to maintain the achievements of the Contributory Pension Scheme (CPS), which has been in place for over 21 years, while ensuring long-term sustainability.
Breakdown of New Requirements
- PFAs with AUM of ₦500 billion and above: ₦20 billion + 1% of AUM.
- PFAs with AUM below ₦500 billion: Flat ₦20 billion.
- Special PFAs (NPF Pensions): ₦30 billion.
- New PFA licenses: ₦20 billion effective immediately.
- PFCs: ₦25 billion + 0.1% of Assets Under Custody (AUC).
- New PFC licenses: ₦25 billion effective immediately.
Compliance Timeline & Monitoring
PenCom has given PFAs and PFCs until December 31, 2026 to comply with the revised capital base. Afterward, capital adequacy will be monitored every two years, based on audited financial statements. Any shortfalls must be corrected within 90 days.
Implications for Nigeria’s Pension Industry
The move is expected to:
- Strengthen financial resilience of pension operators.
- Improve service delivery to retirees and contributors.
- Reduce systemic risks in the fast-growing pension industry.
- Enhance Nigeria’s credibility in global pension fund management.
With over ₦18 trillion in pension assets under management, analysts say the new capital requirements will drive mergers, acquisitions, and stronger corporate governance within the sector.
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