PenCom Raises Minimum Capital Requirements for PFAs and PFCs

The National Pension Commission (PenCom) has directed Pension Fund Administrators (PFAs) to increase their minimum capital base from N5 billion to N20 billion by December 31, 2026. Pension Fund Custodians (PFCs) have also been instructed to raise their capital requirement from N2 billion to N25 billion, while NPF Pensions Limited, which manages pension funds for the Nigeria Police Force, must increase its capital to N30 billion.

The directive was contained in a circular titled “REF: PenCom/INSP/Surv/2025/1255” issued on Monday to all licensed PFAs and PFCs. According to the commission, the review is designed to strengthen financial stability, improve operational resilience, enhance service delivery and ensure the long-term sustainability of operators in the pension industry.

PenCom explained that the new framework aligns capital requirements with the Pension Assets Under Management (AUM) for PFAs and the Assets Under Custody (AUC) for PFCs. This model, the regulator said, reflects global best practice where capital is proportionate to risk exposure.

The circular noted that since the last capital review in April 2021, the pension sector has experienced significant growth in assets, coupled with macroeconomic challenges that demand higher financial buffers. The adjustments, PenCom added, will safeguard the achievements of the Contributory Pension Scheme (CPS), now in its 21st year, while supporting ongoing reforms to position the industry for future growth.

Under the revised guidelines, PFAs with AUM of N500 billion and above must hold a minimum of N20 billion plus one percent of AUM. Those with less than N500 billion in assets must meet a flat capital base of N20 billion. Special-purpose PFAs, such as NPF Pensions Limited, are required to raise N30 billion while the Nigerian University Pension Management Company Limited must hold N20 billion. Any new PFA license will attract an immediate capital requirement of N20 billion.

For PFCs, the capital threshold—unchanged since 2004—has been raised to N25 billion plus 0.1 percent of AUC. New entrants to the market must meet the N25 billion requirement with immediate effect.

PenCom stressed that the rising complexity of custodial operations, especially in areas such as technology, cybersecurity and risk management, necessitated the higher capital base. It added that compliance with the new requirements must be achieved by December 2026, after which capital levels will be reviewed every two years. Any shortfalls identified will have to be corrected within 90 days of notification.

Industry analysts say the move will not only bolster investor confidence but also ensure that Nigeria’s pension operators are better equipped to navigate economic pressures and protect contributors’ funds.