As the recapitalisation deadline given by the regulator to Pension Fund Administrators (PFAs) in the country, small-sized operators that are yet to shore up their capital base or seal merger and acquisition deals have become jittery, BusinessDay has learnt.
As at the last count, about six merger and acquisition arrangements have got the approval of the National Pension Commission (PenCom) and have been concluded or are being concluded.
According to PenCom, Tangerine Group has come into the sector, acquiring and merging APT Pensions with AXA Mansard Pensions; Guaranty Trust Holding Company acquired Investment One Pensions; FCMB acquired AIICO Pensions; and Norrenberger has acquired IEI-Anchor Pensions.
PenCom said as at the end of last year, 11 PFAs out of 22 registered operators had met the capital requirement ahead of the deadline.
Glory Etaduovie, a pension consultant, said players in the industry had shown some capacity to meet the capitalisation requirement.
According to him, the initial challenge for some that wanted a merger arrangement was to scale through about four regulators in trying to seal deals.
He, however, said many of those bottlenecks, particularly with the Securities and Exchange Commission, were later resolved to facilitate deals.
PenCom had on April 27, 2021 mandated PFAs operating in the country to increase their minimum regulatory capital (shareholders’ fund) requirements to N5 billion from N1 billion, giving them 12 months to complete the exercise.
Ehimeme Ohioma, head of surveillance department at the National Pension Commission, had said in a circular, “The increase in the minimum regulatory capital is necessitated by the need to improve the capacity of PFAs in terms of operational efficiency, effectiveness as well as service delivery.”
Read also: Pension assets grow 12% to N13.8trn in February
He said the present capital raise approved by PenCom in April 2021 was the third of such since the coming on board of the Contributory Pension Scheme through the Pension Reform Act 2004.
The first, according to him, was the N150 million capital base in the repealed Pension Reform Act 2004, followed by the second recapitalisation to N1 billion in 2011.
Ohioma said that the objective of the recapitalisation was to improve the financial stability and operational efficiency in the industry.
Describing the directive as right, he said it could not have come at a better time after the last exercise in 2011.
PenCom said sustained growth in assets implied greater fiduciary responsibilities that required more operational capacity by the PFAs.
Pension assets under management have grown by 12 percent year-on-year to N13.8 trillion as at the end of February 2022, climbing marginally by one percent N13.6 trillion in January.
The number of registered contributors within the same period increased by over 324,000 to 9.6 million relative to the comparable period of 2021.
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