The National Pension Commission (PenCom) has announced a significant increase in the minimum capital requirements for Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs), raising the threshold from ₦2 billion to ₦20 billion in a bid to strengthen the pension industry’s financial stability and resilience.
In a circular titled “Revised Minimum Capital Requirements for Licensed Pension Fund Administrators and Pension Fund Custodians”, PenCom disclosed that PFAs managing Assets Under Management (AUM) of ₦500 billion and above must now maintain a capital base of ₦20 billion plus 1% of any excess AUM beyond ₦500 billion. PFAs with AUM below that benchmark must also meet the new ₦20 billion requirement.
Special categories were also outlined: NPF Pensions Limited, as a Special Purpose PFA, is required to hold ₦30 billion, while the Nigerian University Pension Management Company Limited must maintain ₦20 billion. For Pension Fund Custodians, the capital base has been revised upward from ₦2 billion—unchanged since 2004—to ₦25 billion plus 0.1% of Assets Under Custody (AUC).
PenCom explained that the review was necessitated by the exponential growth of pension assets, advances in technology, cybersecurity concerns, and the rising cost of operations. “The capital requirement was reviewed in line with global best practices to ensure that capital is proportionate to the risk exposure of pension operators,” the Commission stated.
The new requirements take effect immediately for new entrants into the sector, while existing PFAs and PFCs have until December 31, 2026, to comply. Compliance will be assessed biennially through audited financial statements, with operators given a 90-day window to address any identified shortfalls.
PenCom stressed that the revision, anchored in Sections 60(1)(b), 62(b), and 115(1) of the Pension Reform Act 2014, is aimed at ensuring the long-term sustainability of the Contributory Pension Scheme (CPS), which has been in operation for 21 years.
The Commission maintained that the adjustment will enhance service delivery, safeguard pension assets, and align Nigeria’s pension industry with international standards of financial risk management.