• Increase the capital threshold for operators to N20BN, N25BN
The National Pension Commission (PENCOM) has announced an important increase in the minimum capital requirements for pension fund managers (PFA) and the custodians of the pension fund (PFC), in an attempt to strengthen the financial capacity of the operators and align with the rapid growth of pension assets.
In a revised circular signed by AM Salem, surveillance director, the capital threshold for the PFA has risen from N5 billion to N20 billion, while PFCs increased from N2 billion to N25 billion.
Pension operators have until December 31, 2026 to meet the new requirements.
According to the revised framework, the PFA with assets under administration (AUM) of N500 billion and above must maintain a capital base of N20 billion plus 1 percent of their AUM.
Those with less than N500 billion in AUM must have a fixed minimum capital of N20 billion.
For custodians, the new N25 billion base will be complemented with an additional 0.1 percent of its custody assets (AUC).
Pencom explained that the capital requirement for custodians had not been reviewed since 2004, despite exponential growth in pension assets and the growing complexity of operations.
The Commission pointed out that the 21 -year framework no longer reflects the current realities of the industry, where a greater investment in technology, cybersecurity and welfare of the staff is needed.
“These developments underline the need to reassess the adaptation of the existing capital threshold to guarantee continuous financial stability and effective risk management in PFC business operations,” said the circular.
The circular articulates the operational need for change, stating that: “The operational panorama of PFC businesses has evolved significantly for 21 years, marked by exponential growth in AUC and a greater complexity of operational activities that require deployment of solid technology, cybersecurity and welfare of the staff.”
“These developments underline the need to reassess the adaptation of the existing capital threshold to guarantee continuous financial stability and effective risk management in PFC business operations.”
The commission declared that the capital adaptation of all operators would be subsequently monitored every two years, depending on their audited financial statements, and any identified deficit must be addressed within 90 days.
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