• Nigeria’s pension regulator raised minimum capital for pension fund administrators (PFAs) to ₦20 billion from ₦5 billion, and for pension fund custodians (PFCs) to ₦25 billion from ₦2 billion.

• The recapitalization must be completed by December 31, 2026, with biennial compliance checks and a 90-day deadline to cover any shortfall.

• The reform could trigger sector consolidation but is expected to strengthen long-term stability and align Nigeria with international risk-based standards.

Nigeria’s National Pension Commission (PenCom) announced on September 26 that it will require pension fund administrators and custodians to recapitalize by end-2026. The regulator said the reform is designed to enhance financial stability, ensure the long-term viability of operators, and align the system with international standards where capital requirements reflect risk exposure.

PenCom increased the minimum capital for PFAs to ₦20 billion (CFA13.4 million) from ₦5 billion and for PFCs to ₦25 billion from ₦2 billion. It said PFC capital had not been reviewed since it was set at ₦2 billion in 2004, despite rising assets under management and greater operational complexity in areas such as cybersecurity, technology, and risk management.

For PFAs, PenCom introduced a tiered system linking capital to assets under management (AUM). Administrators with AUM below ₦500 billion must hold at least ₦20 billion in capital. Those with AUM above ₦500 billion must maintain ₦20 billion plus 1% of the excess above that threshold. Special-purpose administrators, such as NPF Pensions Ltd, must hold ₦30 billion, while Nigerian University Pension Management Company must hold ₦20 billion.

New PFAs will need ₦20 billion in capital to obtain a license. Compliance will be monitored every two years based on audited accounts, and any deficit must be covered within 90 days.

The pension industry last underwent recapitalization in April 2021, when PFA minimum capital was raised from ₦1 billion to ₦5 billion. Since then, the sector has expanded significantly, with 18 licensed PFAs operating as of Q1 2025, according to PenCom.

Agusto & Co. forecasts pension assets under management could exceed ₦29.3 trillion by the end of 2025, driven by growing contributions, stronger investment returns, and regulatory reforms.

Analysts say the higher thresholds may force weaker players to merge or exit but will boost confidence among contributors and investors. The pension system has become a larger share of national savings and an important source of financing for Nigeria’s economy.

This article was initially published in French by Chamberline Moko

Adapted in English by Ange Jason Quenum