By 
Nigeria’s pension industry is facing a major recapitalisation test, with analysts estimating that operators will need about N276.8 billion in fresh capital to comply with new minimum capital requirements set by the National Pension Commission (PenCom).
According to Coronation’s Year in Review and 2026 Outlook on Nigeria, only three Pension Fund Administrators (PFAs)—Stanbic IBTC Pension, Access ARM Pensions, and Leadway Pensure—were capitalised well above the N20 billion threshold prior to the new rules, highlighting the scale of the funding gap across the sector.
PenCom raised the minimum capital base for PFAs to N20 billion and for Pension Fund Custodians to N25 billion in September under its Pension Revolution 2.0 reforms. Under the revised framework, PFAs are grouped into three categories. Category A covers PFAs with over N500 billion in assets under management (AUM) and requires a base capital of N20 billion plus one per cent of AUM above N500 billion. Category B applies to PFAs with less than N500 billion in AUM, which must meet a flat N20 billion requirement, while Category C includes special-purpose PFAs.
Under the new rules, NPF Pensions Limited must maintain a minimum capital of N30 billion, while the Nigerian University Pension Management Company Limited is required to hold N20 billion.
While the original deadline for compliance was December 2026, PenCom Director-General, Ms Omolola Oloworaran, announced at the 2025 PenCom Media Conference that operators now have until June 2027 to fully comply, effectively granting a six-month extension.
To bridge the capital gap, PFAs are expected to rely on a combination of retained earnings, capital injections from existing shareholders, rights issues or private placements, as well as mergers and acquisitions.
Coronation analysts noted that the recapitalisation requirement means virtually all PFAs will need to raise additional equity over the next 15 months. Out of Nigeria’s 18 PFAs, only three had capital significantly above N20 billion before the policy was introduced. Collectively, the industry is estimated to require about N276.8 billion in new capital to meet the revised thresholds.
The report highlighted that Stanbic IBTC Pension Managers, with about N5.9 trillion in AUM and shareholders’ funds of N45.4 billion, would require total capital of about N73.9 billion, leaving a shortfall of roughly N28.5 billion. Access ARM Pensions, with N3.5 trillion in AUM and shareholders’ funds of N22.8 billion, would need around N50 billion in capital, translating to a gap of between N27 billion and N28 billion. Leadway Pensure, which manages N1.8 trillion in AUM, is estimated to require about N33.1 billion in capital and may need to raise an additional N25.5 billion.
Other operators such as NPF Pensions, Premium Pensions, Trustfund Pensions and FCMB Pensions—managing between N0.5 trillion and N1.23 trillion in assets—are projected to require additional capital of between N4.9 billion and N22.6 billion to meet the new benchmarks.
Analysts also foresee a wave of consolidation similar to the banking sector’s 2004 recapitalisation exercise. Smaller PFAs that struggle to raise N20 billion or more may opt for mergers or acquisitions by stronger competitors. Coronation pointed to Verod Capital’s October 2025 sale of its majority stake in Tangerine APT Pensions as an early sign of this trend, with the transaction explicitly linked to PenCom’s new recapitalisation mandate.
At the same time, PFAs backed by large financial groups may be better positioned to meet the new requirements. Subsidiaries of banks and insurance companies could draw on group resources or attract strategic investors, although analysts cautioned that these parent groups may also be managing their own regulatory capital pressures.
Looking ahead, analysts expect a reduction in the number of PFAs by the end of 2026, alongside increased capital market activity as operators seek funding. While consolidation could strengthen the industry’s stability, they stressed the need for careful management to avoid service disruptions to contributors.
The recapitalisation drive is also expected to reshape investment strategies. Analysts anticipate that 2026 could see PFAs make their first allocations to gold-backed exchange-traded funds or commodities funds, albeit on a limited scale. There are also expectations that foreign currency pension funds could debut, allowing Nigerians in the diaspora to make dollar-denominated contributions, potentially opening new inflows into the system.
Separately, Meristem Securities, in its annual outlook, projected that PFAs would deepen their exposure to infrastructure assets, which have seen growing interest. Pension fund investments in infrastructure funds rose by nearly 50 per cent year-on-year to N242.8 billion in the first half of 2025, reflecting their appeal as inflation-hedged, long-term assets that provide diversification and stability during volatile market conditions.
Comments