PenCom Hikes Capital Base for Pension Operators to N20bn and N25bn
By Patience Ikpeme
The National Pension Commission (PenCom) has drastically increased the minimum capital requirements for Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) in a major regulatory move designed to align operators’ financial capacity with the exponential growth in pension assets.
In a revised circular signed by the Director of the Surveillance Department, A.M. Saleem, the minimum capital requirement for PFAs was raised from N5 billion to a floor of N20 billion, while the minimum for PFCs saw a massive increase from N2 billion to N25 billion. Operators have been given a deadline of December 31, 2026, to meet the new capital thresholds.
PenCom explained that the new model strategically links capital requirements to the size and complexity of the pension assets managed by the operators. For PFAs, the new capital requirement will be scaled based on the value of their Assets Under Management (AUM). Specifically, operators with AUM of N500 billion and above will be required to maintain a capital base of N20 billion plus 1 percent of their AUM. PFAs with AUM below N500 billion are required to maintain a fixed capital base of N20 billion.
Similarly, for Pension Fund Custodians (PFCs), the upward review to N25 billion is accompanied by a requirement to provide 0.1 percent of their Assets Under Custody (AUC).
The Commission detailed the reasoning behind the significant review for the custodians, noting that the minimum capital requirement for the PFC business “had not been reviewed since it was established at N2 billion in 2004.”
The circular went on to articulate the operational necessity for the change, stating that:
“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.”
PenCom further asserted that these industry changes necessitated a financial reassessment, confirming:
“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.”
Following the December 2026 deadline, the commission stated that the capital adequacy of all operators would subsequently be monitored every two years, based on their audited financial statements, and any identified shortfall must be addressed within 90 days.
