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Premium Pension Limited and Trustfund Pensions Limited have proposed a merger that will create Nigeria’s third-largest Pension Fund Administrator (PFA).
This was disclosed in the merger notification published by the Federal Competition and Consumer Protection Commission (FCCPC) on Tuesday.
The proposed transaction, if approved, will combine the businesses of both firms into a single entity to be known as Premium Trustfund Pensions Limited, which is expected to rank third in the country’s pension industry.
What they are saying
According to the FCCPC notification, the transaction will be implemented through a Scheme of Merger in line with Section 711 of the Companies and Allied Matters Act (CAMA) 2020.
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- “The merger affects the Nigerian Pension Fund Administration (PFA) market. Premium Pension and Trustfund Pensions are currently the 5th and 6th largest PFAs, respectively. Following the merger, the combined entity is projected to rank 3rd,” the FCCPC states in the notification.
Under the arrangement, all assets, liabilities and undertakings of Premium Pension will be transferred to Trustfund Pensions, after which Premium Pension will be dissolved without being wound up.
Premium Pension was incorporated in 2005 and licensed by the National Pension Commission (PenCom) in December of the same year to operate as a Pension Fund Administrator.
Trustfund Pensions was incorporated in 2004 and also received its PFA licence from PenCom in December 2005.
More insights
According to the notification, both firms currently manage Retirement Savings Account (RSA) Funds I to VI, including the Micro Pension Fund for workers in the informal sector and non-interest Shari’ah-compliant funds.
- They also administer Approved Existing Schemes, the Transitional Contributory Fund, Voluntary Contributions and related pension administration services across the 36 states and the Federal Capital Territory.
- The companies said the merger is expected to deliver strategic, operational and financial benefits to contributors and other stakeholders.
- Among the expected gains are the creation of a top three pension fund administrator with greater scale and operational efficiency, allowing the combined entity to optimise costs, streamline processes and improve service delivery.
The merger is also expected to strengthen investment management capabilities through deeper industry expertise, enhanced research and improved asset allocation strategies, while broadening the company’s national reach by leveraging the combined branch network and digital platforms of both organisations.
In addition, the firms said the transaction would enable the merged entity to diversify its product offerings and better serve Nigeria’s growing population of workers across both the formal and informal sectors.
What you should know
The two companies’ proposed merger comes amid regulatory shifts in the country’s pension industry.
- Last week, the National Pension Commission granted a 24-month regulatory forbearance permitting PFAs to invest in a broader range of securities issued by the parent companies of their respective Pension Fund Custodians (PFCs).
- According to PenCom, the measure reflects prevailing market realities, including operational constraints and the limited availability of quality investable instruments in the domestic market.
The Commission said the forbearance is designed to provide PFAs with greater portfolio flexibility, expand the universe of eligible investments, and improve diversification while supporting the generation of optimal risk-adjusted returns for pension contributors.
