PenCom Raises Minimum Capital for PFAs, Custodians
- The National Pension Commission (PenCom) announced critically important increases to the minimum capital requirements for Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) on November 21, 2023,...
- The new framework for PFAs introduces a tiered capital structure based on Assets Under Management (AUM), as detailed in a circular signed by A.M.
- PenCom substantially revised the minimum capital requirement for PFCs, which had remained at ₦2 billion since 2004.
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PenCom Increases Capital Requirements for Pension fund Administrators and Custodians
The National Pension Commission (PenCom) announced critically important increases to the minimum capital requirements for Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) on November 21, 2023, setting new thresholds at ₦20 billion and ₦25 billion, respectively. This directive is a key component of PenCom’s “Pension Revolution 2.0” initiative.
new Capital Requirements for PFAs
The new framework for PFAs introduces a tiered capital structure based on Assets Under Management (AUM), as detailed in a circular signed by A.M. Saleem, Director of pencom’s Surveillance Department. This tiered approach aims to align capital adequacy with the scale of operations.
| PFA Category | AUM | Minimum Capital Requirement |
|---|---|---|
| Category A | ₦500 billion and above | ₦20 billion + 1% of AUM |
| Category B | Below ₦500 billion | ₦20 billion |
| Category C (NPF Pensions Limited) | special-purpose | ₦30 billion |
| Nigerian University Pension management Company Limited | Special-purpose | ₦20 billion |
| New PFA Licence | N/A | ₦20 billion (effective immediately) |
New Capital Requirements for PFCs
PenCom substantially revised the minimum capital requirement for PFCs, which had remained at ₦2 billion since 2004. The new requirement is set at ₦25 billion plus 0.1% of Assets under Custody (AUC). Any new PFC licence will now require a minimum capital of ₦25 billion, effective immediately. this considerable increase reflects the growing importance of secure custody of pension assets.
Rationale for the Increase
pencom stated that the upward review of capital requirements is essential to bolster the financial stability, operational resilience, and long-term viability of pension operators. This move is intended to strengthen the pension industry and protect the retirement savings of Nigerian citizens. The Commission believes that higher capital levels will enable PFAs and PFCs to better absorb potential losses and withstand economic shocks.
Timeline and Compliance
pfas and PFCs have been granted a period until December 31, 2026, to fully comply with the new capital requirements. This provides operators with a reasonable timeframe to raise the necessary capital through various means, including retained