The new capital base in the pension industry that raised the minimum capital base from N1 billion to N5 billion has attracted new investors to the market.
The Head, Surveillance Department, National Pension Commission (PenCom), Ehimem Ohioma, disclosed this at the 2021 media parley organised by Pension Fund Operators Association of Nigeria (PenOp) with the theme: Micro Pension – Challenges and opportunities for insurance and pension Editors in Lagos.
According to him, with the mandate by PenCom in April this year that Pension Fund Administrators (PFAs) in Nigeria should raise their minimum capital base from N1 billion to N5 billion, more than 11 out of 22 PFAs have met the new requirements.
It will be recalled that PenCom had in April present capital raise approved by the PenCom board in April this year is the third.
The first, according to him, was the N150 million establishing capital set in the repealed Pension Reform Act 2004, followed by the second recapitalisation to N1 billion in 2011, and now, the third from N1 billion to N5bn expected to be concluded in April 2022.
Ohioma said that the objective of the recapitalisation is to improve the financial stability and operational efficiency in the industry, noting that the directive was right, as the last recapitalisation in the industry was done in 2011.
According to him, this is the second recapitalisation done in the industry since the inception of the current Contributory Pension Scheme (CPS). It is obvious that the industry has grown, assets and contributions have increased.
“There is a need for this. They need to retain the real skilled workers. We need to attract talent. There is a need for digitalization. This will cost money too and ensure efficiency, especially with the COVID-19. There has been ongoing consolidation within the industry, so we do not expect any challenges in the industry, as regards recapitalisation.
“On or before February 2022, we expect a picture of what the industry is going to look like before the April deadline,” he said.