Analysts have projected a wave of consolidation among Nigeria’s Pension Fund Administrators (PFAs) in 2026 as operators adjust to the new N20bn minimum capital requirement set by the National Pension Commission (PenCom).
According to the analysts, well-established PFAs that operate as subsidiaries of major financial institutions are better positioned to meet the requirement than standalone operators.
Big Financial Groups Hold Advantage
PFAs backed by banks or insurance groups are expected to rely on group resources or attract strategic investors more easily.
For example, Stanbic IBTC Pensions, a subsidiary of Stanbic IBTC Holdings, is likely to receive capital support from its parent company to meet the recapitalisation threshold.
However, analysts caution that even PFAs within larger financial groups may face funding pressure. Many banking and insurance groups are still raising capital or have recently done so to meet their own regulatory requirements.
Fewer PFAs Expected by Year-End
Looking ahead, analysts expect a decline in the total number of PFAs by the end of 2026. They also foresee increased capital market activity as operators seek funding from parent companies or external investors.
“At least a few mergers or acquisitions are likely, as weaker players combine to meet the N20bn threshold,” the analysts said.
They added that by the fourth quarter of 2026, the number of PFAs could shrink significantly, similar to what occurred during past banking sector recapitalisations.
While consolidation could strengthen industry stability, the analysts stressed that transitions must be carefully managed to avoid service disruptions for pension contributors.
Investment Strategy Set to Change
Analysts also expect a shift in PFAs’ investment strategies in 2026 following recent changes to PenCom’s investment guidelines.
They project that PFAs may begin allocating funds to gold-backed exchange-traded funds (ETFs) or commodities-based instruments. Initial allocations are expected to be small due to regulatory limits and limited market familiarity.
In addition, Fund VII, a foreign currency-denominated pension fund, could debut in 2026. This would allow Nigerians in the diaspora to open Retirement Savings Accounts (RSAs) that accept dollar contributions.
Although early inflows may be modest, analysts say the move would lay the foundation for greater global diversification of Nigeria’s pension assets.
By 2026, one or two PFAs may also launch pilot dollar-denominated funds for eligible clients. These funds would invest in Eurobonds and other approved US dollar assets, marking a major step toward globalising the pension industry.
PFAs Increase Focus on Infrastructure
Meanwhile, Meristem Securities has projected that PFAs will further expand their exposure to infrastructure assets in 2026.
Infrastructure investments offer low correlation with equities and bonds, providing diversification benefits. They also serve as effective inflation hedges and perform well during market volatility.
Meristem noted that pension fund investments in infrastructure funds grew by 49.4 per cent year-on-year to ₦242.80bn in the first half of 2025, compared with ₦162.48bn in the same period of 2024.
The firm said the growth reflects rising confidence among pension fund managers in infrastructure-linked assets as a long-term defensive investment.
