Contrary to news making the rounds that the National Pension Commission (PenCom) is considering shifting the June 30, 2012 deadline for recapitalisation of Pension Fund Administrators (PFAs), the Commission has reiterated that the date remains sacrosanct.
Reacting to news from some quarters that the deadline may have been extended by three months, to September 30, 2012, the PenCom Director-General, Mr Mohammad Ahmad, told LEADERSHIP that was not true.
PenCom had last year raised the statutory capital for PFAs from the N150 million to N1 billion, giving them 13 months ending June 30, 2012, to fully comply with the new capitalisation directive.
However, LEADERSHIP investigations revealed that barely two months and half to the expiration of the deadline, many PFAs are yet to meet the new capital base requirement and are now making frantic efforts to meet up. One the PFAs said it is currently planning rights issue and offer for subscription which are expected to be concluded by the end of May, 2012.
Some banks, which either fully or partially own PFAs, are in the process of divesting from the companies in line with Central Bank of Nigeria’s directive for them to focus on strict banking activities.
As a result of this, the affected PFAs are facing the challenge of how they will cope after divestment by the banks and also meet up with the recapitalisation deadline. Currently, there are 24 PFAs and four Pension Fund Custodians (PFCs) operating in the country. The capital base of PFCs remains N5 billion.
LEADERSHIP checks also revealed that some PFAs are seeking to form alliances through mergers and or acquisition to enable them to meet the deadline, and some that have met the minimum requirement are seeking to acquire others in order to increase their market share.
Meanwhile, in the circular entitled “Minimum Share Capital Requirement for Licenced PFAs” PenCom defined the new capital to mean shareholders’ fund unimpaired by losses.
“This circular is therefore to intimate PFAs about the commission’s decision on the new minimum share capital requirements for a PFA business that a minimum shareholders’ fund of N1 billion unimpaired by losses has been approved.
“This amount is considered adequate to absorb unforeseen losses and improve the financial condition as well as business process of the PFAs given the current market situation. The increase in the minimum capital requirement would also encourage healthy mergers or acquisitions and promote stability in the industry.
“Furthermore, it is expected that the improved financial condition of the PFAs after the implementation of the reviewed capital requirement would lead to improved service delivery and product development resulting from automation (timely payments) ,” the regulator stated.