PenCom Orders PFAs and PFCs to Raise Capital Base by 2026

The National Pension Commission (PenCom) has issued a directive requiring Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) to significantly increase their minimum capital before the end of 2026.

According to a circular released on Monday, PenCom raised the capital base for PFAs from N5 billion to N20 billion, while PFCs must increase from N2 billion to N25 billion. NPF Pensions Limited, which serves the Police Force, is mandated to raise its capital to N30 billion.

PenCom explained that the review was conducted in line with Sections 60, 62, and 115 of the Pension Reform Act 2014. It noted that the increase is necessary to strengthen financial stability, improve resilience, enhance service delivery, and secure the long-term sustainability of pension operators.

The Commission stated, “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 asset growth and operational complexity. PFAs are therefore required to maintain adequate capital to sustain the achievements of the Contributory Pension Scheme after 21 years of existence.”

Under the new framework, PFAs with assets under management above N500 billion must hold N20 billion plus 1% of AUM. PFAs with less than N500 billion AUM will maintain N20 billion, while NPF Pensions Limited is set at N30 billion. New entrants into the market will require N20 billion as baseline capital.

For PFCs, the new capital requirement will be N25 billion plus 0.1% of assets under custody. The Commission stressed that the previous N2 billion threshold, set in 2004, no longer reflects the scale of operations and risks in the sector.

PenCom further noted that compliance must be achieved by December 31, 2026, after which operators will be monitored every two years. Any identified shortfalls must be rectified within 90 days.