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…Mandates insurance firms to cut ties with non-compliant employers
By Bimbola Oyesola
In a decisive move to enforce compliance and strengthen Nigeria’s pension and insurance systems, the National Pension Commission (PenCom) and the National Insurance Commission (NAICOM) have jointly directed all insurance firms to cease doing business with employers defaulting on pension and life insurance obligations.
The directive, issued through a Joint Circular signed by Abdulrahaman Muhammad Saleem, Director of Surveillance at PenCom, and Dr. Talmiz Usman, Director of Legal, Enforcement and Market Development at NAICOM, represents one of the most far-reaching enforcement collaborations between the two regulators.
According to the circular, the action seeks to ensure full adherence to the Pension Reform Act (PRA) 2014 and the newly enacted Nigerian Insurance Industry Reform Act (NIIRA) 2025, both of which are central to protecting workers’ benefits and strengthening corporate governance in the insurance sector.
“The era of partial compliance is over,” said Saleem. “Any company that fails to meet its pension or insurance obligations will not be permitted to transact business within the regulated space. We are embedding compliance at every level of operation.”
Under Section 2 of the PRA 2014, employers are mandated to participate in the Contributory Pension Scheme (CPS), remit pension deductions within seven working days of salary payment, and maintain Group Life Assurance (GLA) coverage for all employees. Yet, despite repeated audits and sanctions, many employers have continued to flout these provisions.
PenCom disclosed that it has already appointed Recovery Agents to trace and recover unpaid pension remittances and penalties from defaulting organisations. However, the Commission admitted that the persistence of non-compliance — even among players in the financial services sector — has continued to undermine the credibility of the pension system.
“This collaboration with NAICOM is a clear message that the law will now speak louder than persuasion,” Dr. Usman stated. “Compliance is not optional; it is the foundation of trust and sustainability in both the pension and insurance industries.”
Under the new directive, Licensed Insurance Companies (LICs) must now hold valid Pension Clearance Certificates (PCCs) from PenCom and Group Life Assurance Certificates in line with NIIRA 2025 before engaging in any form of business or investment activity.
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The requirement also extends to vendors, service providers, and counterparties seeking to do business with insurance companies. They must possess valid PCCs and GLA Certificates as a precondition for contractual agreements or partnerships.
In a move described by analysts as a “compliance ripple effect,” PenCom and NAICOM have further mandated that all investment transactions, including commercial papers, bond issuances, and bank placements must involve counterparties who can provide a Compliance Attestation. This document must confirm that their own vendors and subcontractors are also fully compliant.
“This cascading structure ensures that compliance is not only top-down but systemic,” noted an industry source familiar with the circular. “It means no one in the insurance ecosystem can hide under the radar anymore.”
The regulators also directed insurance firms to incorporate these requirements into their internal governance, vendor selection, due diligence, and risk assessment processes. Parent companies, subsidiaries, and institutional shareholders are likewise required to demonstrate full compliance before any new business or investment approval.
Recognising the operational adjustments required, PenCom and NAICOM granted a six-month transition window for companies to realign their systems and update their policies accordingly.
During this period, firms are expected to educate their vendors, review compliance procedures, and report progress to both regulators.
Industry experts have hailed the joint circular as a landmark in regulatory synergy. “This move will raise the bar for accountability and force employers to respect the rights of Nigerian workers,” said an insurance analyst, adding that “it’s the kind of bold reform the industry has been waiting for.”
As the six-month countdown begins, both PenCom and NAICOM have vowed to maintain a zero-tolerance stance on violations.
“We are committed to protecting workers’ pensions and ensuring the integrity of our insurance system,” Saleem reaffirmed. “Non-compliant employers will have no place in Nigeria’s regulated financial landscape.”
