The National Pension Commission (PenCom) has raised the capital requirements for Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) from N5 billion to N20 billion for PFAs.
Operators have been given a deadline of December 31, 2026, to meet the new capital thresholds.
The decision according to the Commission is aimed at strengthening financial stability and operational resilience, marking one of the most significant regulatory shifts in Nigeria’s pension industry in over two decades.
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In a circular titled: “Revised Minimum Capital Requirements for Licensed Pension Fund Administrators and Pension Fund Custodians”, PenCom stated that PFAs with Assets Under Management (AUM) of N500 billion and above must now maintain a capital base of N20 billion plus 1% of the excess AUM beyond N500 billion.
PFAs with AUM below N500 billion are also required to meet the new N20 billion minimum capital.
Special Purpose PFAs, such as NPF Pensions Limited, must hold N30 billion, while the Nigerian University Pension Management Company Limited is required to maintain N20 billion.
“The capital requirement was reviewed in line with global best practice, which ensures that capital is proportionate to the risk exposure of the Pension Fund Operator,” PenCom stated.
“The new model aligned the capital requirement with the Pension Asset Under Management (AUM) and Assets Under Custody (AUC) of the PFAs and PFCs respectively.”
For Pension Fund Custodians (PFCs), the minimum capital requirement has been raised from N2 billion, unchanged since 2004, to N25 billion plus 0.1% of AUC.
The Commission cited the exponential growth in assets under custody and the increasing complexity of operations, including technology deployment, cybersecurity and staff welfare, as key drivers of the revision.
“The operating landscape of PFC business has evolved significantly over 21 years,” the circular noted. “These developments underscore the need to reassess the adequacy of the existing capital threshold to ensure continued financial stability and effective risk management.”
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.
Approval of foreign currency pension contributions for Nigerians abroad
In another regulatory guideline, the Commission approved new rules allowing Nigerians abroad and foreign workers in Nigeria to contribute to pension funds in foreign currency.
The new regulations apply to Nigerians living and working abroad and employees of foreign companies and international organisations in Nigeria not covered by the Pension Reform Act 2014.
According to the regulation, foreign currency pension contributors will receive their retirement benefits in dollars, either through en bloc payment or programmed withdrawal.
The commission said Nigerians and foreigners working in Nigeria for foreign companies and international organisations can access their pensions upon reaching the age of 50 or on health grounds.
The regulation said the contributors will be required to provide duly completed withdrawal forms, valid means of identification such as an international passport, NIN slip, driver’s licence or voter’s card, and any other documentation as specified by the commission.
PenCom also said contributors who prefer to receive their benefits in naira will be allowed to do so.
For deceased or missing persons, the agency said the pension fund administrator will pay the benefits in line with the requirements under the revised regulation for the administration of retirement and terminal benefits.
The commission also introduced new withdrawal conditions for foreign currency pension contributors under the revised guidelines.
According to the policy, withdrawals can only be made six months after the initial contribution and “not more than twice in a year before retirement”.
PenCom added that contributors must also “give notice of two working days” before making such withdrawals.
The agency further stated that a foreign pension contributor who joined the scheme under these guidelines after the age of 50 years shall be eligible to access their full contributions as they wish, provided the PFA was notified one month before such withdrawal.
PenCom emphasized that the review is anchored in Sections 60(1)(b), 62(b), and 115(1) of the Pension Reform Act (PRA) 2014. It aims to support the long-term viability of pension operators, improve service delivery, and ensure the sustainability of the Contributory Pension Scheme (CPS), which has now been in operation for 21 years.
“PFAs are therefore required to maintain adequate capital to sustain the achievements of the CPS, support ongoing pension reform initiatives, and deploy adequate resources to effectively fund operations,” PenCom stated.
The revised capital will be measured as Shareholders’ Fund unimpaired by losses, less the Statutory Reserve Fund.
The announcement signals PenCom’s commitment to aligning Nigeria’s pension industry with global standards, ensuring that operators are well-capitalized to navigate macroeconomic pressures and deliver secure retirement benefits to millions of Nigerians.
Implementation of pension arrears backed by N758bn bond
In the same vein, PenCom assured pensioners across Nigeria that all outstanding pension increases approved by the Federal Government will be fully implemented before the end of the year, backed by a N758 billion bond released by President Bola Ahmed Tinubu.
Director General of PenCom who gave the assurance during a courtesy visit to the headquarters of the Nigeria Union of Pensioners (NUP) in Abuja recently said the welfare of pensioners has become a top priority for the current administration
According to her, the protection of pensioners and the safeguarding of their benefits remain at the heart of PenCom’s mandate and with the N758 billion bond approved by President Tinubu, pension increases earlier announced by the government will soon be fully implemented.
“We are working to ensure that funds are disbursed without delay so that retirees can enjoy the dignity they deserve after years of service,” he said.
The PenCom boss stressed that the Commission and NUP share a common mission of ensuring retirees’ welfare, adding that sustained collaboration would help secure the gains of pension reforms.
What it means
Daily Trust reports that the Commission had earlier approved the recapitalisation exercise for the PFAs from N2 billion to N5 billion with a 12-month transition period from April 27, 2021 to April 27, 2022.
Subsequently in May 2022, PenCom noted that majority of the PFAs met the requirement deadline, while saying the recapitalisation process led to the reduction of the number of PFAs from 22 to 20 with some mergers and acquisitions within the period.
With the new capital base increase, experts say this would drive investor’s confidence in the pension sector as part of the pension revolution 2.0.
