Agudah X- Rays Post Recapitalisation Issues to Pension Fund Managers

As pension sector operators continue to race towards meeting the regulator’s recapitalisation requirements with June 30th, 2027 as deadline, their attention has been drawn to issues that lie ahead after recapitalisation.

These issues have been summarised in an acronym titled SCOPE : meaning Scale, Compliance and regulatory awareness, Organisational adoption of technology, People strategy and culture and External engagement and differentiation.

Former Chief Executive Officer of Pension Operators Association of Nigeria(PenOp), Mr Oguche Agudah, stated these while delivering a paper titled Post Recapitalisation and Market Dynamics in Nigerian Pension Industry at the 11th Annual National conference of Nigerian Association of Insurance and Pension Editors( NAIPE) inLagos recently..

The need for scale, he said, manifested in business combination witnessed in pension sector some of which are the combination between Trust- fund Pensions and Premium Pension and the combination between Leadway and PAL Pension.

Agudah, who is the Founder and Managing Partner of HRISP Partners, highlighted the advantages of these as gaining economics of scale by the various firms involved, increasing complexity of operations, streamlining costs and competing effectively in the market place.

On compliance and regulatory awareness, Agudah noted that, pension was the most rejected sector and this has made the regulator to be at the centre of the industry, ensuring that operators have sound compliance and culture.

On adoption of technology, he said, operators must ask themselves the question on how to leverage technology to make their operations quicker, simple and help them to scale.

According to him, they should also meditate on how to use Artificial Intelligence to compete as well as how to manage cyber security threat.

Agudah highlighted fact about the on going recapitalisation exercise in the industry, as PenCom, having mandated all licensed pension fund administrators to raise their minimum capital from N5 billion to N20 billion and one percent more if their Asset Under Management is above N500 billion by June 2027.

Agudah said, second fact about recapitalisation in the pension sector is PenCom mandating all licensed pension fund custodians (PFCs) to raise their minimum capital to N25 billion by June 2027.

He gave reasons for the pension sector recapitalisation as consolidation of the industry, need to shore up pension losses, to create confidence in the sector, to shape the industry for greater activities and to strengthen the industry.

Agudah warned the pension sector operators that recapitalisation was not the end of the business but just a piece of the puzzle pointing to them that in addition to the minimum recapitalisation directive there were other surrounding directives meant to make the industry stronger, more resilient and in line with the developmental needs of the country.

“Beyond recapitalisation, there are guidelines for cross- boarder pension contribution such as review of investment guidelines to allow for more investments in sectors that promote economic growth, guidelines for agents to deepen personal pension plan coverage and include minors, guidelines for improved corporate governance of licensed pension fund operators, framework for payment of additional benefit for retiring civil servants as well as framework for pension compliance certificate and contribution,” he highlighted..

On current pension market dynamics, Agudah said, overview of the entire market shows that the banking sector, insurance sector and investment managers are core owners of the market.

He listed banks which have stakes in the pension sector as Stanbic IBTC Bank which owns Stanbic IBTC Pensions, Access Bank which owns Access ARM Pensions, GTCO which owns GTCO Pension Managers, Fidelity Bank, which owns Fidelity Pension Managers Ltd and FCMB which owns FCMB Pensions.

Agudah highlighted pension institutions owned by insurance firms as Leadway Pension Managers owned by Leadway Group, Crusader Sterling Pensions, Oak Pensions Limited and Veritas Glanvils Pensions .

According to Agudah, those owned by investment groups include Parthian Pensions, Trustfund Pension, Cardinalstone Pensions, and CitizensPensions.