PENCOM increases Pension Fund Administrators’ capital base to N1bn

The National Pension Commission (PENCOM) has increased the capital base of licensed Pension Fund Administrators (PFAs) from N150 million to N1billion effective June 2012.

Pencon announced this in a circular entitled “minimum share capital requirement for licensed pension fund administrators (PFA)”. The circular dated 31st May, 2011 with Ref number PENCOM/INSP/SURV/11/03 was signed by M.Y. Datti, Head Surveillance Department.

The circular reads in part: “the commission has through its oversight function observed that the minimum paid up capital of N150 million was no longer adequate to meet the operational expenses of a PFA business given its intensive IT infrastructure and an average gestation period of five years. The commission has consulted with the PFAs and based on their technical input the new capital base was reached.”

It said, “a minimum shareholders’ fund of N1billion unimpaired by losses has been approved. This amount is considered adequate to absorb unforeseen losses and improve the financial condition as well business processes of the PFAs given the current market situation.

“The increase in the minimum capital requirement would also encourage healthy mergers or acquisitions and promote stability in the industry.”

It maintained that this will increase capacity and employment of qualified personnel; improve ICT capability; creation of more business outlets for increase presence nationwide and stronger/efficient research unit.

The commission said it would monitor and ensure compliance by the said date.

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