PFAs need N276.8bn to meet new capital requirement

…Stanbic IBTC, Access ARM, others to raise more capital

Under the new framework, capital requirements are now tied to the size of Assets Under Management (AUM), meaning the country’s seven largest PFAs — Stanbic IBTC Pensions, Access ARM, Leadway Pensure/Pal, NPF Pensions, Premium Pensions, Trustfund Pensions, and FCMB Pensions — must raise additional capital on AUM exceeding N500 billion.

The firms are expected to inject billions of naira in fresh capital to meet the December 31, 2026 compliance deadline

PenCom, in a circular issued on September 26, 2025, announced a revised minimum capital requirements for Licensed Pension Fund Administrators (LPFA) and Pension Fund Custodians (PFCs)

Under the new framework, PFAs with AUM below N500 billion will require at least N20 billion in capital, while PFAs with AUM of N500 billion and above will require N20 billion, plus one percent of the portion of their AUM above N500 billion.

PenCom said the minimum capital for Special Purpose PFAs are -NPF Pensions Limited, N30 billion; and the Nigerian University Pension Management Company Limited, N20 billion.

Meanwhile, capital requirement for existing PFCs is N25 billion + 0.1 percent of AUC, while the minimum requirement for a new PFC Licence is N25 billion.

Industry data show that Stanbic IBTC Pension Managers, with an asset under management (AUM) of N5.895 trillion and shareholders’ funds of N45.41 billion as of the end of 2024, has one percent of its excess AUM estimated at N53.945 billion. This means the firm needs N73.945 billion in total capital, leaving a shortfall of N28.535 billion to meet the new minimum requirement.

Also, Access ARM Pensions, which managed N3.5 trillion in assets and had shareholders’ funds of N22.781 billion at the end of 2024, has one percent of its excess AUM estimated at N30 billion. It therefore needs N50 billion in total capital, translating to a N28.535 billion shortfall under the new rule.

Following its merger with PAL Pensions, Leadway Pensure now manages N1.811 trillion in assets. Its one percent excess AUM stands at N13.113 billion, bringing the total capital requirement to N25.513 billion in order to meet the new N33.113 billion benchmark.

Other leading PFAs and their estimated additional capital requirements include: NPF Pensions, N22.585 billion; Premium Pensions, N18.724 billion; Trustfund Pensions, N4.920 billion; and FCMB Pensions, N12.002 billion

Rufus Baba, an insurance sector analyst, shared analytical data on the recapitalisation of PFA in his X handle, questioning the rationale behind the increment by the industry regulator.

According to him, it is curious that PFAs with no balance sheet risk need more capital than regional banks, citing Providus Bank, a regional financial institution.

According to him, the guideline simply means that the big PFAs will perpetually raise capital as their AUM grows.

Daddy Jide, another analyst, in his X handle, said the exercise will lead to mergers and acquisitions, noting that the level of capital increment will make the industry less attractive for investors, citing low return on investment.

In the released guidelines signed by A. M. Saleem, director, Surveillance Department, PenCom said the review is to enhance the financial stability, operational resilience, improve service delivery and long-term viability of the PFAs and PFCs.

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.

“PFAs are therefore required to maintain adequate capital to sustain the achievements of the Contributory Pension Scheme (CPS) after 21 years of existence, support on-going 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.” (BusinessDay)