How N758bn bond, recapitalisation, others shaped pension sector in 2025

The pension sector, considered as one of the most critical financial services sectors in Nigeria has over the years evolved and attracted public scrutiny. This is as a result of soaring pension fund assets which have surpassed N26 trillion as well as the current reforms undertaken in the sector. Daily Trust reports that some of […]

The pension sector, considered as one of the most critical financial services sectors in Nigeria has over the years evolved and attracted public scrutiny.

This is as a result of soaring pension fund assets which have surpassed N26 trillion as well as the current reforms undertaken in the sector.

Daily Trust reports that some of these reforms included recapitalisation of Pension Fund Administrators, dollar contributions for Nigerians in diaspora, N758 billion bond to clear decade long outstanding liabilities.

 

Recapitalisation announcement

In September, the National Pension Commission (PenCom) raised the capital requirements for Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) from N5 billion to N20 billion for PFAs.

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Operators had earlier been given a deadline of December 31, 2026, to meet the new capital thresholds.

In a circular titled: “Revised Minimum Capital Requirements for Licensed Pension Fund Administrators and Pension Fund Custodians”, PenCom stated that PFAs with Assets Under Management (AUM) of N500 billion and above must now maintain a capital base of N20 billion plus 1% of the excess AUM beyond N500 billion.

In a circular titled: “Revised Minimum Capital Requirements for Licensed Pension Fund Administrators and Pension Fund Custodians”, PenCom stated that PFAs with Assets Under Management (AUM) of N500 billion and above must now maintain a capital base of N20 billion plus 1% of the excess AUM beyond N500 billion.

PFAs with AUM below N500 billion are also required to meet the new N20 billion minimum capital.

Special Purpose PFAs, such as NPF Pensions Limited, must hold N30 billion, while the Nigerian University Pension Management Company Limited is required to maintain N20 billion.

“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,” PenCom stated.

“The new model aligned the capital requirement with the Pension Asset Under Management (AUM) and Assets Under Custody (AUC) of the PFAs and PFCs respectively.”

For Pension Fund Custodians (PFCs), the minimum capital requirement has been raised from N2 billion, unchanged since 2004, to N25 billion plus 0.1% of AUC.

The Commission cited the exponential growth in assets under custody and the increasing complexity of operations, including technology deployment, cybersecurity and staff welfare, as key drivers of the revision.

“The operating landscape of PFC business has evolved significantly over 21 years,” the circular noted, adding, “These developments underscore the need to reassess the adequacy of the existing capital threshold to ensure continued financial stability and effective risk management.”

Following the December 2026 deadline, the commission stated that the capital adequacy of all operators would subsequently be monitored every two years, based on their audited financial statements, and any identified shortfall must be addressed within 90 days.

However, PenCom recently announced the extension of the pension industry recapitalisation deadline to June 2027, extending it from December 2026.

Daily Trust reports that with the extension, operators have an extra six months to meet the Minimum Capital Requirement.

 

Foreign currency pension contributions for Nigerians abroad

Another major policy shift that shaped the Pension Sector in 2025 was the approval allowing Nigerians abroad and foreign workers in Nigeria to contribute to pension funds in foreign currency.

The new regulations apply to Nigerians living and working abroad and employees of foreign companies and international organisations in Nigeria not covered by the Pension Reform Act 2014.

According to the regulation, foreign currency pension contributors will receive their retirement benefits in dollars, either through en bloc payment or programmed withdrawal.

The commission said Nigerians and foreigners working in Nigeria for foreign companies and international organisations can access their pensions upon reaching the age of 50 or on health grounds.

The regulation said the contributors will be required to provide duly completed withdrawal forms, valid means of identification such as an international passport, NIN slip, driver’s licence or voter’s card, and any other documentation as specified by the commission.

PenCom also said contributors who prefer to receive their benefits in naira will be allowed to do so.

For deceased or missing persons, the agency said the pension fund administrator will pay the benefits in line with the requirements under the revised regulation for the administration of retirement and terminal benefits.

The commission also introduced new withdrawal conditions for foreign currency pension contributors under the revised guidelines.

According to the policy, withdrawals can only be made six months after the initial contribution and “not more than twice in a year before retirement”.

PenCom added that contributors must also “give notice of two working days” before making such withdrawals.

The agency further stated that a foreign pension contributor who joined the scheme under these guidelines after the age of 50 years shall be eligible to access their full contributions as they wish, provided the PFA was notified one month before such withdrawal.

PenCom emphasized that the review is anchored in Sections 60 (1) (b), 62 (b), and 115(1) of the Pension Reform Act (PRA) 2014. It aims to support the long-term viability of pension operators, improve service delivery, and ensure the sustainability of the Contributory Pension Scheme (CPS), which has now been in operation for 21 years.

“PFAs are therefore required to maintain adequate capital to sustain the achievements of the CPS, support ongoing pension reform initiatives, and deploy adequate resources to effectively fund operations,” PenCom stated.

The revised capital will be measured as Shareholders’ Fund unimpaired by losses, less the Statutory Reserve Fund.

The announcement signals PenCom’s commitment to aligning Nigeria’s pension industry with global standards, ensuring that operators are well-capitalized to navigate macroeconomic pressures and deliver secure retirement benefits to millions of Nigerians.

 

N758bn bond to clear decade long liabilities

Also, one of the biggest activities in the sector was the announcement of a N758 billion bond  approved by President Bola Tinubu to clear outstanding pension liabilities under the contributory pension scheme (CPS).

The bond was targeted at clearing decade-long pension liabilities of retirees under the contributory pension scheme.

Briefing newsmen recently, PenCom DG, Ms. Omolola Oloworaran said the total amount released was N757.9 billion, with N387 billion earmarked for pension increases.

According to her, N387 billion allocated for pension increase owed to retirees. Of this, N362.74 billion has already been disbursed to about 9.1 million retirees, while the remaining N24.7 billion is being processed for payment.

The disbursement also includes N252 billion for accrued rights of federal workers who retired before the 2012 Contributory Pension Scheme (CPS), N107 billion for the Pension Protection Fund to support low-income retirees, and N10 billion specifically set aside to settle outstanding pension obligations for professors across federal tertiary institutions, with payments being made in batches.

In addition, PenCom reported that N107 billion was remitted to cover a 2.5% shortfall in the Federal Government’s pension contributions between 2017 and 2021, benefiting about 750,223 Retirement Savings Accounts.

Overall, more than N577.58 billion of the approved funds has already been credited to the accounts of retirees and contributors, directly impacting over 1.05 million RSAs nationwide.

Experts weigh in Chief Operating Officer, Pension Fund Operators Association of Nigeria (PenOp), Tonia Ifeanyi-Okoro, said the release of the bond would significantly ease pressure on retirees and strengthen confidence in the CPS.

“The disbursement of the pension bond is a landmark intervention. It sends a strong signal that pension obligations are sacrosanct and reassures contributors that their retirement savings are being managed within a credible and responsive framework,” she said

Also speaking, Senior Technical Adviser at the Contributory Pension and Happy Retirement Advocacy, Mr. Sani Mustapha told Daily Trust that the recent recapitalisation will put PFAs on their feet and strenghten the sector

“You recall that the last recapitalisation exercise for the PFAs was three years ago from N2 billion to N5 billion with a 12-month transition period from April 27, 2021 to April 27, 2022.

“Later in May 2022, PenCom said that the majority of the PFAs met the requirement deadline, while saying the recapitalisation process led to the reduction of the number of PFAs from 22 to 20 with some mergers and acquisitions within the period.

“Therefore my assessment shows that with the new capital base increase, experts it would drive investor’s confidence in the pension sector as part of the pension revolution 2.0”

He however called for deepening and adoption of the Scheme in subnational levels which remains low.