By Barth Ikiebe
The National Pension Commission (PenCom) has raised the minimum capital requirement for Pension Fund Administrators (PFAs) from N5 billion to N20 billion and Pension Fund Custodians (PFCs) from N2 billion to N25 billion.
The PFAs and PFCs have up to December 31, 2026 while they would subsequently be monitored by the commission every two years based on the audited financial statements of the operators, and any shortfall shall be made up within 90 days.
This was contained in a revised circular released and signed by the Director of Surveillance Department, A.M. Saleem.
According to PenCom, the new model aligned the capital requirement with the pension assets under management (AUM) and assets under custody (AUC) of the PFAs and PFCs, respectively.
According to the commission, for PFAs, operators with AUM of N500 billion and above will be required to maintain a capital base of N20 billion plus 1 percent of AUM.
Also, PFAs with AUM below N500 billion are to maintain a capital base of N20 billion.
PenCom stated that aside from the PFCs upward review to N25 billion, they are also expected to provide 0.1 per cent of their AUC.
The circular read: “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,” PenCom noted.
