By Chukwuma Umeorah
The National Pension Commission (PenCom) has directed all Licensed Pension Fund Operators (LPFOs) to cease business transactions with service providers and vendors that do not remit pension contributions for their employees, as confirmed by a valid Pension Clearance Certificate (PCC) issued by the commission.
This directive was issued in a statement on Friday. PenCom states that this move is part of renewed efforts to enforce compliance with the Pension Reform Act (PRA) 2014 and expand the coverage of the Contributory Pension Scheme (CPS).
Despite various engagement strategies and enforcement mechanisms, PenCom observed that many employers remain in breach of Section 2 of the PRA 2014, which mandates the remittance of pension contributions no later than seven working days after salary payment.
In response, the commission has intensified its regulatory posture. “Despite continuous engagement and enforcement measures, a significant number of employers remain non-compliant with this legal obligation,” the Commission stated.
To reinforce compliance, PenCom has instructed LPFOs comprising Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) to demand valid PCCs from all vendors and service providers as a condition for entering into or renewing service-level agreements.
The compliance requirement also extends to investment activities. LPFOs are now required to invest only in companies and financial institutions that enforce the same PCC compliance standard across their vendor and partner networks.
Further tightening the framework, the Commission now requires that every counterparty to a transaction involving pension assets must execute a Compliance Attestation. This attestation, which confirms that the counterparty enforces PCC requirements across its vendor chain, must be updated annually and incorporated into investment documentation.
“Every Counterparty must execute a Compliance Attestation, confirming that it enforces the PCC requirement across its vendor network,” PenCom stated.
Additionally, counterparties are to submit valid PCCs obtained from their vendors and service providers before any transaction involving pension funds such as commercial papers, bond issuances, and bank placements can proceed.
LPFOs have also been instructed to integrate these new compliance standards into their internal policies, vendor selection frameworks, due diligence processes, and overall investment risk assessments.
The directive goes even further to include parent companies, subsidiaries, holding firms, and institutional shareholders of LPFOs, all of whom are now required to hold valid PCCs and ensure that the vendors they engage also comply with the same requirements.
“The Parent Companies, Subsidiaries, Holding Companies and Institutional Shareholders of LPFOs shall possess valid Pension Clearance Certificate (PCC) and ensure that every vendor and service provider engaged by them complies with the requirement,” the Commission emphasized.
To ensure smooth adoption, PenCom has provided a six-month transition period for full implementation. The Commission expressed confidence that these stringent measures will not only strengthen enforcement but also foster a culture of accountability and broaden pension coverage across Nigeria’s formal and informal economic sectors.