Pension Operators Urged To Prepare For Post-Recapitalisation Challenges

By Sola Alabadan

Pension operators in Nigeria have been urged to prepare for the challenges beyond recapitalisation, with emphasis on business expansion, regulatory compliance, technology adoption, workforce development and market differentiation.

The call was made by the former Chief Executive Officer of the Pension Operators Association of Nigeria (PenOp), Mr. Oguche Agudah, while delivering a paper titled “Post-Recapitalisation and Market Dynamics in the Nigerian Pension Industry” at the 11th Annual Conference of the Nigerian Association of Insurance and Pension Editors (NAIPE) in Lagos.

Agudah, who is the Founder and Managing Partner of HRISP Partners, outlined five key priorities summarised in the acronym SCOPE, representing Scale; Compliance and Regulatory Awareness; Organisational Adoption of Technology; People Strategy and Culture; and External Engagement and Differentiation.

He said pension operators must look beyond meeting the recapitalisation requirements and develop strategies to remain competitive, efficient and responsive to changing market conditions.

On scale, Agudah cited business combinations in the pension industry, including the combination of Trustfund Pensions and Premium Pension, as well as the combination involving Leadway and PAL Pensions.

He said such combinations could help operators achieve economies of scale, streamline costs, manage increasingly complex operations and compete more effectively in the marketplace.

According to him, consolidation could also enable pension firms to strengthen their operational capacity and improve their ability to respond to evolving industry demands.

On compliance and regulatory awareness, Agudah said pension operators must maintain strong compliance cultures, noting that regulatory oversight remained central to the industry’s operations.

He urged operators to pay close attention to regulatory requirements and ensure that their governance and operational practices met the expectations of the National Pension Commission (PenCom).

Addressing technology adoption, the former PenOp chief said operators needed to consider how digital solutions could simplify processes, improve operational speed and support business expansion.

He also challenged pension firms to explore the use of artificial intelligence (AI) to improve competitiveness while developing effective measures to address cybersecurity threats.

Agudah highlighted the major provisions of the ongoing pension industry recapitalisation exercise, noting that PenCom had directed all licensed Pension Fund Administrators (PFAs) to increase their minimum capital from N5 billion to N20 billion by June 30, 2027.

He added that PFAs with assets under management exceeding N500 billion would be required to maintain an additional one per cent in capital, in line with the applicable regulatory directive.

He further stated that licensed Pension Fund Custodians (PFCs) had been directed to raise their minimum capital to N25 billion by the same deadline.

Agudah identified the objectives of recapitalisation as consolidating the industry, strengthening operators’ financial positions, restoring confidence, improving resilience and preparing the sector for greater activity.

However, he warned that meeting the new capital requirements should not be regarded as the end of the reform process.

“Recapitalisation is not the end of the business; it is just a piece of the puzzle,” he said, urging operators to prepare for other regulatory measures designed to strengthen the industry and align it with Nigeria’s developmental needs.

He listed additional regulatory initiatives, including guidelines for cross-border pension contributions, reviews of investment guidelines to encourage investments in sectors that promote economic growth, and guidelines for agents to expand coverage under the Personal Pension Plan, including provisions relating to minors.

Other measures, he said, included improved corporate governance guidelines for licensed pension operators, a framework for additional benefits for retiring civil servants, and frameworks covering pension compliance certificates and pension contributions.

Agudah said operators needed to understand these developments and incorporate them into their business strategies to remain competitive in the evolving pension market.

On the current structure of the pension market, Agudah said banks, insurance companies and investment management firms remained the major institutional owners of pension operators.

Among pension firms linked to banks, he listed Stanbic IBTC Pensions, owned by Stanbic IBTC Bank; Access ARM Pensions, associated with Access Bank; GTCO Pension Managers, linked to GTCO; Fidelity Pension Managers, owned by Fidelity Bank; and FCMB Pensions, associated with FCMB.

He also identified pension institutions linked to insurance groups, including Leadway Pension Managers, owned by Leadway Group; Crusader Sterling Pensions; Oak Pensions Limited; and Veritas Glanvills Pensions.

According to Agudah, investment groups also have a significant presence in the sector, with firms such as Parthian Pensions, Trustfund Pension, CardinalStone Pensions and Citizens Pensions among the operators in this category.

He said understanding the ownership structure and competitive dynamics of the market would be important for pension operators as consolidation and regulatory reforms reshape the industry.

Agudah’s presentation underscored the need for pension firms to combine stronger capitalisation with effective technology, sound governance, skilled personnel and clear market positioning to improve their long-term sustainability and service delivery.