Requirements and Costs of Obtaining a Pension Commission License (PenCom) for Pension Fund Administrators in Nigeria

Establishing a Pension Fund Administrator (PFA) in Nigeria requires obtaining a license from the National Pension Commission (PenCom).

This comprehensive guide outlines the requirements and costs involved in the licensing process, ensuring your application is robust, interesting, and action-oriented for potential clients.

Application Procedure

1. Eligibility and Initial Steps

• Organisations seeking to operate as a PFA must be licensed by PenCom under Sections 54, 58, 60, and 115 of the Pension Reform Act 2014.

• Applications must be submitted in the prescribed format to the Director General, National Pension Commission.

• After meeting the initial requirements, an Approval-In-Principle (AIP) valid for three months may be granted.

• Satisfactory fulfillment of all requirements leads to the issuance of an operational license.

Requirements for Obtaining a PenCom License by a PFA

1. Corporate Requirements

• The applicant must be a duly incorporated limited liability or public company in Nigeria.

• The company should exclusively manage pension funds and not engage in other businesses.

• The company must have no history of compounded debts or unfulfilled obligations.

• Demonstrate professional and technical capacity for pension fund management and retirement benefits administration.

• Compliance with the Pension Reform Act 2014 and other relevant laws.

• Possess robust Information and Communication Technology (ICT) systems for real-time transactions and record-keeping.

• Ensure all pension contributions are up-to-date and maintain a valid Group Life Insurance Policy.

2. Application Documentation

• A completed Application Form (APP/02/PFA).

• A non-refundable application fee of ₦1,000,000 paid via Remitta.

• Contact details of the responsible individual for inquiries.

• The physical and proposed head office addresses.

• Attestation of the applicant’s integrity in financial management.

3. Supporting Documents

• Certified True Copy of the Memorandum and Articles of Association.

• Certified True Copy of Form C02 (Allotment of Shares), C07 (Particulars of Directors), C03(Location of Registered Office), and Certificate of Incorporation.

• Latest three years audited accounts and management letters (for existing companies).

• A signed Technical Services Agreement (if applicable).

• A comprehensive Business Plan including business strategy, ownership structure, financial projections, and organisational structure.

• Details of policy on branch expansion and evidence of capital adequacy.

Minimum Capital Requirement (Shareholders Funds)

Before issuing an AIP, applicants must deposit the minimum capital as 5,000,000,000 ( Five Billion Naira) in an escrow account. This deposit will fund startup operations.

Requirements for Commencement of Operations

Upon readiness to commence operations within three months of receiving an AIP, the following must be submitted to PenCom:

• A non-refundable license fee of ₦5,000,000.

• Copies of shareholders’ register and share certificates.

• Opening statement of affairs signed by directors and a Chartered Accountant.

• Operations manual and minutes of the pre-commencement board meeting.

• Evidence of ICT installation and readiness.

• Employment letters for the management team.

• Proof of effective Management Information System (MIS).

• Evidence of established standing committees for risk management, nomination and governance, audit, and investment strategy.

• Appointment of a Compliance Officer in accordance with Section 80 of the Act.

• Undertakings by board members and top management to adhere to high ethical standards and compliance with the Pension Reform Act 2014.

Submission of Documents

All application documents should be submitted in both hard and soft copies to:

Director-General

National Pension Commission

Plot 174, Adetokunbo Ademola Crescent

Wuse II, PMB 5170, Wuse

Abuja, Nigeria

Inquiry

For further inquiries, contact the above address. Additional guidelines and relevant forms can be downloaded from the PenCom website: www.pencom.gov.ng.

Cost Summary Chart

Here is a summary of the costs involved in obtaining a PenCom PFA license:

Conclusion

This guide provides a detailed overview of the requirements and costs associated with obtaining a PenCom license for PFAs in Nigeria, ensuring that potential clients are well-informed and ready to take action.