The National Pension Commission (PenCom) has announced an upward review of the capital base for pension fund operators across the country.
Gatekeepers News reports that in a circular released on Friday, A.M. Saleem, director of the surveillance department at PenCom, confirmed that the minimum capital requirement for securing a pension fund administrator (PFA) licence has been set at N20 billion with immediate effect.
The commission explained that the new framework ties capital requirements to the value of pension assets under management (AUM) for PFAs and assets under custody (AUC) for pension fund custodians (PFCs).
Under the guidelines, PFAs managing assets worth N500 billion or more will be required to maintain N20 billion plus 1 percent of their AUM. Those with less than N500 billion in assets are expected to hold a flat N20 billion as capital base.
Similarly, the capital threshold for PFCs has been revised to N25 billion plus 0.1 percent of AUC. PenCom noted that the existing benchmark for custodians had been unchanged since 2004, when it was fixed at N2 billion.
The circular stated, “The minimum capital requirement for PFC business had not been reviewed since it was established at N2 billion in 2004.”
“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.”
The commission has given all licensed PFAs and PFCs until December 31, 2026, to meet the new standard. Afterward, compliance will be tracked biennially through audited financial statements, with any gaps required to be covered within 90 days.
