September 29, (THEWILL) — The Nigerian Exchange (NGX) Pension Index recorded a robust performance in September – hitting 6,677.28 points on Friday, September 26 – a 17.63 points increase from the 6,659.65 the market closed on August 29, 2025. This is a remarkable performance given the challenging macroeconomic environment that has lingered for a long time.
The NGX Pension index tracks the performance and reflects the dimension of activities in the industry. It is part of the NGX All-Share Index – a benchmark index that mirrors the performance of the Nigerian stock market.
The pension industry showed positive stock performance in the first half of 2025, with total assets under management growing to over N24.6 trillion by June 2025, driven by strong performance in domestic equities and government securities
Indications of the positive trend had manifested in the first four months of the year when the stock returned 9.07% by April 2025. However, specific fund performance varied, with some funds experiencing negative returns in March, while others showed robust growth. On the whole, the outlook remained strong.
The positive trend in the NGX Pension index is driven by the technology-driven reforms embarked by the National Pension Commission, PenCom to boost investor confidence and achieve the overall objective of the 21-year-old regulator.
Strategic dimensions
In line with the reforms, PenCom recently announced a sweeping revision to the capital requirements for Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs), raising the minimum threshold for PFAs tenfold, from N2 billion to N20 billion. The move, aimed at strengthening financial stability and operational resilience, marks one of the most significant regulatory shifts in Nigeria’s pension industry in over two decades.
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. 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,” the regulator said.
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.
According to PenCom, “The operating landscape of PFC business has evolved significantly over 21 years,” the circular noted. “These developments underscore the need to reassess the adequacy of the existing capital threshold to ensure continued financial stability and effective risk management.”
The revised capital requirements for both PFAs and PFCs will take effect immediately for new licenses, while existing operators have until December 31, 2026, to comply.
PenCom said it will monitor compliance every two years based on audited financial statements, and any shortfall must be rectified within 90 days.
PenCom emphasised 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.
Industry experts say the reform signals PenCom’s commitment to aligning Nigeria’s pension industry with global standards, ensuring that operators are well-capitalised to navigate macroeconomic pressures and deliver secure retirement benefits to millions of Nigerians.
Security lending
This development came barely 24 hours after PenCom unveiled a revised regulation that allows pension funds to gain exposure to gold through tradable Gold Receipts listed on Securities and Exchange Commission (SEC)-recognised exchanges.
The apex pension regulatory body has also introduced a framework to guide pension fund administrators (PFAs) on engagement in securities lending and repurchase transactions (repos).
Securities lending is a transaction where securities are temporarily transferred from a lender to a borrower, typically in exchange for a fee or collateral, while Repos are the sale of securities with a simultaneous agreement to repurchase them at a specified price on a specified date.
PenCom in a circular said that reporting and disclosure of quarterly statements to PenCom include the value of securities on loan (by asset class). The quarterly reports on the policy also include a list of counterparties and exposures, composition and valuation of collateral, and income earned and fees paid.
For annual reports to retirement savings account (RSA) holders, the director said PFAs shall disclose securities lending and repo activities, revenue earned, and agent arrangements.
The PFAs shall disclose, in both quarterly returns to the commission and annual reports to RSA holders, the gross revenue earned from securities lending and repo transactions.
To enhance transparency, the report will indicate total fees and expenses deducted, with a breakdown of each component (agent fees, custodial fees, operational costs), “The net revenue credited to the fund; the identity of any agent, lender, or third party receiving a share of lending revenue, any affiliation between the PFA and the agenlender, where applicable,” will also be clearly reported.
FG pension bond
Following the ₦758 billion bond released by President Bola Tinubu, PenCom has assured pensioners across Nigeria that all outstanding pension increases approved by the Federal Government will be fully implemented before the end of the year.
Omolola Oloworaran, Director General of PenCom, gave the assurance during a courtesy visit to the headquarters of the Nigeria Union of Pensioners (NUP) in Abuja last week.
Speaking at the meeting, Oloworaran commended the NUP for its tireless advocacy in defending the interests of pensioners. She noted that the Union’s representation on PenCom’s Governing Board had been vital to the smooth running and effective implementation of the Contributory Pension Scheme (CPS).
According to her, the protection of pensioners and the safeguarding of their benefits remain at the heart of PenCom’s mandate and with the ₦758 billion bond approved by President Tinubu, pension increases earlier announced by the government will soon be fully implemented.
“We are working to ensure that funds are disbursed without delay so that retirees can enjoy the dignity they deserve after years of service,” she said.
THEWILL reports that PenCom is strategically leveraging technology to drive its operations. These include digitising processes, offering flexible payment options, and enhancing customer service through mobile apps and online platforms.
PenCom has intensified efforts to integrate technology into every facet of the pension industry to make the Contributory Pension Scheme (CPS) more accessible and sustainable.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
