Analysts warn that the pensions industry faces a significant challenge, as it will require about N276.8 billion to meet the new minimum capital requirements set by the National Pension Commission during this first full year of recapitalisation.
According to Coronation’s Year in Review and 2026 Outlook on Nigeria, only three Pension Fund Administrators, Stanbic IBTC Pension, Access ARM Pensions, and Leadway Pensure, were capitalised significantly above the N20bn benchmark, underscoring the scale of the funding gap across the sector.
PenCom raised the minimum capital for PFAs and Pension Fund Custodians to N20bn and N25bn, respectively, in September’s Pension Revolution 2.0. PFAs are now divided into three categories. Category A includes PFAs with over N500bn in AUM and requires N20bn plus one per cent of AUM above N500bn.
Category B covers PFAs with less than N500bn in AUM, requiring a N20bn minimum capital. Category C includes special-purpose PFAs. NPF Pensions Limited must hold a minimum of N30bn, and Nigerian University Pension Management Company Limited needs N20bn.
The deadline for compliance at the issuance of the circular was December 2026; however, last month, the PenCom Director-General, Ms Omolola Oloworaran, at the 2025 PenCom Media Conference, announced that every operator must be compliant by June 2027, giving operators an extra six months to get their capital in place.
To meet these requirements, PFAs are expected to employ a mix of strategies: retained earnings (profits over the next 15 months will add to the capital), injection of funds by existing shareholders, rights issues or private placements to new investors, and mergers & acquisitions.
Breaking down the impact of the recapitalisation, the analysts at Coronation said, “The immediate impact of the new capital requirement is that virtually all PFAs must raise additional equity over the next 15 months. Out of Nigeria’s 18 PFAs, only three had capital well above N20bn prior to this policy announcement (Stanbic IBTC Pension, Access ARM Pensions and Leadway Pensure). Industry data analysis indicates that PFAs collectively need about N276.8bn in new capital to meet the requirements by the 2026 deadline.”
According to the report, Stanbic IBTC Pension Managers have about N5.9tn in assets under management, with current shareholders’ funds worth N45.4bn. It would need about N73.9bn in capital, hence a capital shortfall of about N28.5bn. At Access-ARM Pension, AUM is at about N3.5tn with shareholders’ funds of N22.8bn, and its total capital requirement is in the region of N50bn; thus, it would need between N27 and N28bn to meet PenCom’s threshold. Another top player is Leadway Pensure with N1.8tn in AUM. While its shareholders’ fund is not available, it would need about N33.1bn in MCR and may need to cough up about N25.5bn in extra capital to meet the threshold. The likes of NPF Pensions, Premium Pensions, Trustfund Pensions and FCMB Pensions, with N1.1tn, N1.2tn, N1.23tn and N0.5tn in AUM, would need to raise additional capital of N22.6bn, N18.7bn, N4.9bn and N12.0bn, respectively.
Projecting a wave of consolidation similar to what happened in the banking sector in 2004, Coronation said, “Smaller PFAs that struggle to raise N20+bn may decide to merge with or be acquired by larger, financially stronger competitors. We are already seeing early signs of this. In October 2025, Verod Capital (a private equity firm) announced the sale of its majority stake in Tangerine APT Pensions to another investor, explicitly noting PenCom’s new recapitalisation mandate as a catalyst for this ‘strategic restructuring’. Tangerine APT is a mid-sized PFA (N445bn AUM) that now must attain N20bn capital, and the change in ownership to APT Securities is aimed at meeting that goal. More such deals are anticipated as the 2026 deadline approaches.
“On the flip side, well-established PFAs that are subsidiaries of major financial groups may be better positioned to meet the requirement. For instance, Stanbic IBTC Pensions is part of Stanbic IBTC Holdings (a banking and financial services group), which will likely shore up its pension arm’s capital, as required. In general, PFAs backed by banks or insurers may leverage group resources or attract new strategic investors more readily than standalone PFAs. We should, however, bear in mind that even PFAs that are part of larger financial groups in banking and insurance will be looking for capital when their group entities are either still raising their own capital or have just raised it to meet their own respective regulatory requirements.”
In terms of outlook, the analysts expect a decline in the number of Pension Fund Operators at the end of this year and an increase in capital market activities as PFAs approach the markets or parent companies for funding.
The analysts said, “At least a few mergers or acquisitions are likely, as weaker players combine to meet the N20bn threshold. By Q4 2026, the total number of PFAs could shrink (just as the banks did in past recapitalisations), leaving a smaller roster of better capitalised administrators. This consolidation can be positive for the industry’s stability, though it needs to be managed to avoid any service disruptions for contributors during transitions.”
The investment playbook in 2026 is also expected to be different, again given the changes that PenCom has made to the investment rules for PFAs.
“We expect to see, for example, the first allocations by PFAs to gold-backed ETFs or commodities funds in 2026, albeit starting small (given regulatory limits and the need to gain familiarity). Fund VII (foreign currency fund) might also debut in 2026 as PFAs, together with PenCom, roll out operational guidelines for Nigerians abroad to open RSAs that accept dollar contributions. This could tap into the Nigerian diaspora community, bringing new inflows.
“Although the initial scale may be modest, over time, it sets the stage for global diversification of Nigeria’s pension assets. By 2026, one or two PFAs might launch pilot dollar-denominated funds for qualifying clients, investing in Eurobonds and other permitted USD assets, a landmark development for the industry’s globalisation.”
Still on what the New Year holds, Meristem, in its annual outlook, projected that PFAs would widen their interest in infrastructure funding, which had grown almost 50 per cent as of the first half of 2025.
“Infrastructure assets generally show a low correlation with equities and bonds, which can offer significant diversification benefits. Their inflation hedging characteristics and essential-service nature make them particularly effective in weathering turbulent market cycles. This reinforces their role as a defensive anchor in multi-asset portfolios. Interestingly, pension funds’ investment in infrastructure funds grew by 49.40 per cent YoY to NGN 242.80bn in H1:2025 (vs. NGN 162.48bn in H1:2024), indicating an improving investor interest in infrastructure-linked assets,” said the Meristem Securities analysts.
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