*Sets 31st Dec As Deadline For Compliance
The National Pension Commission (PenCom) has announced new minimum capital requirement for Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs).
According to released guidelines signed by A.M. Salem, Director, Surveillance Department of the commission, posted via its official X Account, that the commission has also fixed 31 December 2026 as deadline for compliance.
Under the new requirements, PFAs with Asset Under Management AUM of ₦500 billion & above will require ₦20 billion minimum capital + 1% of (AUM – ₦500 billion) while PFAs with AUM below ₦500 billion will require ₦20 billion minimum capital. For new PFAs they required N20billion to commence business
Special Purpose such as NPF Pensions and Nigerian University pension management company limited are expected to remain in the business with capital base of N30 billion and N20 billion respectively.
It added that existing minimum capital requirement for new PFA License shall be ₦20 billion with immediate effect.
The commission also disclosed that for PFCs to remain in business they need minimum capital of N25 billion +0.1% of AUC while new PFC license requires N25billion.
Highlighting reasons for the review, the commission said @is in pursuant to Sections 60 (1) (b), 62 (b) and 115 (1) of the Pension Reform Act (PRA) 2014, adding that the review is aimed to enhance the financial stability, operational resilience, improve service delivery and long-term viability of the PFAs and PFCs.
It added that 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.
“Since the last review of the minimum capital requirement for PFA business in April 2021, the pension industry has witnessed significant changes in terms of the geometric growth of the AUM and complex operating environment, macroeconomic pressures requiring deployment of adequate capital.
“PFAs are therefore required to maintain adequate capital to sustain the achievements of the Contributory Pension Scheme (CPS) after 21 years of existence, support ongoing pension reform initiatives aimed at positioning the Nigerian pension industry to respond to macroeconomic pressures, and deployment of adequate resources to effectively fund operations, improve service delivery and ensure long-term sustainability.
The commission noted that the minimum capital requirement for PFC business had not been reviewed since it was established at ₦2 billion in 2004.
According to a PenCom, the operating landscape of PFC business has evolved significantly over 21 years, marked by exponential growth in AUC and increased complexity of operational activities requiring deployment of robust technology, cybersecurity and staff welfare.
“These developments underscore the need to reassess the adequacy of the existing capital threshold to ensure continued financial stability and effective risk management in the operations of the PFC business.”
“Accordingly, the revised minimum capital requirement for Licensed PFCs shall be based on Shareholders’ Fund, unimpaired by losses.
On Monitoring of Compliance, the commission said the revised capital requirement would subsequently be monitored by the Commission every two years based on the audited financial statements of the Pension Fund Operator and any shortfall shall be made up within 90 days.
