Pension Fund Administrators and Custodians

Pension Fund Administrators and Custodians

Pension Fund Administrator and Custodians

In Nigeria’s pension landscape, Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) are pivotal entities, each serving a distinct purpose in managing and safeguarding pension funds. Let’s delve into the essential functions and disparities between PFAs and PFCs, shedding light on their roles and contributions to the nation’s pension system.

Pension Fund Administrators?

PFAs serve as managers of individual Retirement Savings Accounts (RSAs), assuming a vital role in overseeing and managing retirement funds. Their responsibilities encompass the entire retirement planning spectrum, ensuring the secure and efficient management of individual RSAs. Their roles and responsibilities include:

RSA Management

PFAs are responsible for meticulously managing individual RSAs, maintaining accurate records, tracking contributions, and facilitating withdrawals according to regulatory guidelines.

Investment Decisions

Playing a crucial role in financial decision-making, PFAs strategically invest pension funds across diverse channels to optimize returns and ensure sustainable growth over time.

Retirement Benefits Processing

PFAs handle the processing of retirement benefits, ensuring a seamless transition for retirees by disbursing funds in adherence to regulatory requirements.

Education and Communication

Beyond financial management, PFAs engage in educational initiatives, providing contributors with essential information about their pension rights, available investment options, and the importance of effective retirement planning.

Pension Fund Custodians?

PFCs function as gatekeepers, safeguarding pension fund assets and ensuring their secure handling. They help to make sure the PFAs’ are performing their fiduciary duties. Their specific role and functions include:

Safekeeping of Assets

PFCs are entrusted with safeguarding pension fund assets and implementing robust security measures to prevent unauthorized access or misuse.

Settlement of Transactions

All financial transactions related to pension fund assets pass through PFCs, who act as intermediaries, facilitating seamless settlement of trades by regulatory guidelines.

Asset Valuation

Conducting regular valuations, PFCs provide accurate assessments of pension fund assets, contributing valuable insights for informed investment decisions by PFAs.

Regulatory Compliance

Operating within a stringent regulatory framework set by the National Pension Commission (PenCom), PFCs ensure compliance to maintain the integrity of the pension system.

In simple terms, Pension Fund Administrators (PFAs) are like financial stewards who handle and grow your pension contributions. They are licensed by the Pension Commission (PenCom) to open Retirement Savings Accounts (RSA) for employees, invest and manage pension funds, and provide regular updates on your contributions. They invest your money in various assets to ensure it grows, and you receive monthly reports about how your pension is performing.

On the other hand, Pension Fund Custodians (PFCs) are responsible for safeguarding pension fund assets. When your organization deducts pension from your salary, it goes to the PFCs, who then inform the PFAs about the deposited amount. The PFAs can access these funds for investments. The PFAs cannot directly hold the pension fund assets; the contributions go directly to the Custodian, who notifies the PFA, and the PFA credits your retirement savings account. The Custodian holds these assets in trust for you. Their differences are specifically highlighted below:

 Pension Fund Administrators (PFAs)Pension Fund Custodians (PFCs)
Primary RoleManage individual Retirement Savings Accounts (RSAs)Safeguard and warehouse pension fund assets
ResponsibilitiesRSA management and making Investment decisions –Involved in Safekeeping of assets, Settlement of transactions, Asset valuation, Regulatory compliance
Function RelationshipActive involvement in growing and managing pension contributionsProvide a secure foundation, shielding funds from risks
Examples of ActivitiesInvesting pension funds – Processing retiree benefits – Educating contributorsSafekeeping of pension assets – Facilitating transactions – Valuating pension fund assets – Ensuring regulatory compliance
Outcome FocusGrowth and management of individual pension contributionsSecure handling and custody of pension fund assets
Collaboration DynamicsCollaborates with PFCs for secure custody and settlement of pension fundsCollaborates with PFAs to ensure seamless fund management
High-Level ObjectiveEnsure contributors’ funds grow and are well-managed for future benefitsSafeguard pension assets and maintain the integrity of the pension system

Pension Fund Custodians in Nigeria

There are several Pension Fund Custodians (PFCs) in Nigeria licensed by the National Pension Commission (PenCom) to safeguard and manage pension fund assets. They include:

  • Zenith Pension Custodian Nigeria Limited
  • First Pension Custodian Nigeria Limited
  • United Capital Pension Custodian Limited

Pension Fund Administrators in Nigeria

They include:

  • ARM Pension Managers Limited
  • AXA Mansard Pension Limited
  • Crusader Sterling Pensions Limited
  • FCMB Pensions Limited
  • LeadWay Pensure PFA Limited
  • PAL Pensions Limited
  • Sigma Pensions Limited

Final Thoughts

In summary, the dynamics of Nigeria’s pension system involve a harmonious collaboration between Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs). PFAs play a pivotal role in managing individual Retirement Savings Accounts (RSAs), making strategic investments, and ensuring the growth of pension contributions.

On the other hand, PFCs act as custodians, safeguarding pension fund assets with a focus on security and regulatory compliance. Together, they create a robust framework that instils confidence in contributors, offering a secure path to a dignified retirement.


1. What is the role of a Pension Fund Administrator (PFA)?

PFAs are entrusted with managing individual Retirement Savings Accounts (RSAs), making investments, processing retirement benefits, and providing regular updates to contributors.

2. What is the primary responsibility of a Pension Fund Custodian (PFC)?

PFCs safeguard and warehouse pension fund assets, ensuring secure handling, settlement of transactions, asset valuation, and regulatory compliance.

3. How do PFAs and PFCs collaborate?

PFAs and PFCs work collaboratively, with PFAs relying on PFCs to secure and notify them of deposited pension contributions, which PFAs then access for strategic investments.

4. Can PFAs directly hold pension fund assets?

No, PFAs are not allowed to directly hold pension fund assets. Contributions go directly to the Custodian, who holds the assets on trust and notifies the PFA.

5. What is the focus of PFAs and PFCs?

PFAs focus on growing and managing individual pension contributions, while PFCs emphasize secure handling and custody of pension fund assets.

6. How often do PFAs issue reports to contributors?

PFAs issue periodic reports, often monthly, detailing the performance of contributors’ pension contributions and the overall status of their Retirement Savings Accounts.

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