Nigeria: PenCom authorises PFAs to appoint external auditors and actuaries

The National Pension Commission (PenCom) has granted Pension Fund Administrators (PFAs) the authority to appoint external auditors and actuaries for Approved Existing Schemes (AES) and Additional Benefits Schemes (ABS), in a move aimed at strengthening compliance and safeguarding pension assets.

The directive was contained in a recent circular issued to all licensed PFAs and signed by the Director of PenCom’s Surveillance Department, A. M. Saleem.

According to the Commission, the decision follows widespread non-compliance by Trustees and Sponsor Companies, many of which have failed to appoint external auditors and actuaries for their pension schemes as required by law.

Under Section 50(2) of the Pension Reform Act (PRA) 2014, employers operating Defined Benefit Schemes are required to conduct annual actuarial valuations to assess the adequacy of pension fund assets. In addition, Section 2.1(3) of the Framework for the Establishment of ABS mandates Trustees and Sponsor Companies of AES and ABS to appoint both an actuarial firm and an external auditor to carry out actuarial valuations and audits in line with Sections 50(2) and 66(2) of the PRA 2014.

However, PenCom said its supervisory reviews revealed that a significant number of Trustees and Sponsor Companies remain in default, having failed to make the necessary appointments.

“The failure of the Trustees/Sponsor Companies to appoint auditors and actuaries poses a risk to the schemes’ ability to meet their obligations to members and constitutes a violation of the PRA 2014 and the regulations issued by the Commission,” PenCom stated.

To address the lapses, the Commission outlined new compliance procedures. Under the guidelines, PFAs or Lead PFAs are required to notify Trustees or Sponsor Companies to appoint an external auditor and an actuary at least two months before the end of each financial year. If no appointment is made within 21 days, the PFA must issue a reminder, warning that it will proceed to appoint the professionals if no response is received within five working days.

Upon securing PenCom’s approval, the PFA is to notify the Trustees or Sponsor Companies of the terms of engagement and inform them that the approved audit and actuarial fees will be charged to the relevant pension scheme under the PFA’s management.

Separately, PenCom has directed all self-funded federal government agencies whose salary structures are covered by National Salaries, Incomes and Wages Commission (NSIWC) circulars to implement approved pension increases for eligible retirees. Agencies not listed in the NSIWC circulars have been advised to engage the Commission to determine the appropriate pension adjustments applicable to their retirees.