In a decisive step to strengthen Nigeria’s pension industry, the National Pension Commission (PenCom) has raised the minimum capital requirements for Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) to ₦20 billion and ₦25 billion respectively. Existing operators have until 31 December 2026 to meet the new thresholds, while the requirements take immediate effect for new licence applicants.
The announcement, made via a circular issued by the Commission this week, comes as part of its broader reform agenda, Pension Revolution 2.0, aimed at overhauling the regulatory and investment landscape of the pension sector. This is the first adjustment to PFA capital requirements since 2021, when the benchmark was increased from ₦1 billion to ₦5 billion. For PFCs, it marks the first revision since the ₦2 billion baseline was established in 2004.
Under the new framework, capital requirements for PFAs will now be tiered according to the size of their Assets Under Management (AUM). Category A PFAs, with AUM of ₦500 billion and above, must meet a minimum capital of ₦20 billion plus an additional 1% of their AUM. Category B, comprising PFAs with less than ₦500 billion in AUM, must raise capital to a flat ₦20 billion. Category C, for specialised institutions such as NPF Pensions Limited and the Nigerian University Pension Management Company Limited, carries higher fixed thresholds of ₦30 billion and ₦20 billion respectively.
PFCs, meanwhile, will now be required to maintain a Shareholders’ Fund unimpaired by losses of ₦25 billion, plus 0.1% of the Assets Under Custody (AuC). Both PFAs and PFCs must comply with these requirements by the 2026 deadline, with PenCom stating that audited financials will be reviewed biennially and any shortfall must be rectified within 90 days.
Explaining the rationale for the upward revision, A.M. Saleem, Director of the Surveillance Department at PenCom, said: “The review is to enhance the financial stability and operational resilience and improve service delivery and long-term viability of the PFAs and PFCs. 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. The new model aligned the capital requirement with the Pension Asset Under Management and Assets Under Custody of the PFAs and PFCs, respectively.”
He further noted that since the last capital review, the industry has witnessed significant asset growth alongside growing macroeconomic pressures. “PFAs are therefore required to maintain adequate capital to sustain the achievements of the Contributory Pension Scheme after 21 years of existence, support ongoing pension reform initiatives aimed at positioning the Nigerian pension industry to respond to macroeconomic pressures, and deploy adequate resources to effectively fund operations, improve service delivery and ensure long-term sustainability.”
The capital increase is part of a broader regulatory pivot under Pension Revolution 2.0. In addition to the capital adjustments, PenCom has announced plans to introduce a minimum pension guarantee to ensure retirees maintain a dignified standard of living. The Commission has also expanded the scope of investable assets to include reverse repos, gold receipts, securities lending, private placements, commodity-backed instruments, agriculture funds, and derivatives, strictly for risk management. These changes, accompanied by new risk limits and ESG integration, reflect PenCom’s intent to diversify pension portfolios while reinforcing the long-term health and competitiveness of the sector.
