PenCom pegs minimum capital requirement of PFAs at N20bn, PFCs N25bn
*Timeline for compliance December 31 2026.
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Chuks Udo Okonta
The National Pension Commission (PenCom) has pegged the Minimum Capital Requirement (MCR) for Pension Fund Administrators (PFAs) at N20 billion and for Pension Fund Custodians N25 billion.
A Circular issued by PenCom referenced: PenCom/INSP/Surv/2025/1255; entitled: Revised Minimum Capital Requirements for Licensed Pension Fund Administrators and Pension Fund Custodians; dated September 26 2025; signed by the
Director, Surveillance Department Abdulrahman Saleem and sent to all licensed Pension Fund Administrators and Custodians, noted that the Commission has reviewed the minimum capital requirements for Pension Fund Administrators and Pension Fund Custodians pursuant to Sections 60 (1) (b), 62 (b) and 115 (1) of the Pension Reform Act (PRA) 2014.
It said the review is to enhance the financial stability, operational resilience, improve service delivery and long-term viability of the PFAs and PFCs.
PenCom stated that 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, stressing that 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.
On the Minimum Capital Requirement for PFAs, PenCom said 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 the geometric growth of the AUM and complex operating environment, macroeconomic pressures requiring deployment of adequate capital.
It submitted that PFAs are therefore required to maintain adequate capital to sustain the achievements of the Contributory Pension Scheme (CPS) after 21 years of existence, support ongoing pension reform initiatives aimed at
positioning the Nigerian pension industry to respond to macroeconomic
pressures and deployment of adequate resources to effectively fund operations, improve service delivery and ensure long-term sustainability.
Accordingly, it posited that the revised minimum capital requirement of PFAs shall be measured as the Shareholders’ Fund unimpaired by losses, less the Statutory Reserve Fund, as stratified as follows:
Category A
PFAs with AUM of ₦500 billion & above,
₦20 billion + 1 per cent of (AUM – ₦500 billion).
Category B
PFAs with AUM below
₦500 billion, ₦20 billion
Category C
Special Purpose
PFAs:
NPF Pensions
Limited ₦30 billion
Nigerian University
Pension Management
Company Limited
₦20 billion.
The pension industry regulator said the minimum capital requirement for new PFA license shall be N20 billion with immediate effect.
On Minimum Capital Requirement of PFCs, it noted that the minimum capital requirement for PFC business had not been reviewed since it was established at ₦2 billion in 2004, stating that 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, adding that 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.
Accordingly, the revised minimum capital requirement for Licensed PFCs
shall be based on Shareholders’ Fund, unimpaired by losses, determined
as follows:N25 billion + 0.1% of AUC, it said.
It stressed that the minimum capital requirement for new PFC license shall be N25 billion with immediate effect.
According to PenCom the timeline for compliance with the revised capital requirements for both licensed PFAs and PFCs shall be 31 December 2026.
The revised capital requirement would subsequently be monitored by the
Commission every two years based on the audited financial statements of the Pension Fund Operator and any shortfall shall be made up within 90 days, it posited.
