By 
The National Pension Commission (PenCom) has issued a decisive directive to all Licensed Pension Fund Operators (LPFOs), comprising Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs), prohibiting them from engaging with any service providers or vendors that fail to comply with statutory pension remittances.
Effective immediately, PenCom requires that all counterparties must present a valid Pension Clearance Certificate (PCC) as evidence of compliance with the Contributory Pension Scheme (CPS), in line with the provisions of Section 2 of the Pension Reform Act (PRA) 2014. This law mandates all employers across the public and private sectors—including federal, state, and local governments—to remit pension contributions no later than seven working days after salary disbursement.
Despite ongoing regulatory engagement, a significant number of employers have remained non-compliant. To address this, PenCom has intensified enforcement through the deployment of Recovery Agents (RAs) to audit defaulting employers, recover outstanding contributions, and impose sanctions.
Strict Compliance Measures for Service Engagements
In the latest circular, PenCom directed LPFOs to ensure that all service-level or technical agreements—either new or renewed—are only executed with vendors that present valid PCCs. Furthermore, LPFOs are now required to transact investments exclusively with entities that enforce PCC requirements across their own vendor and service provider chains.
“Every counterparty must provide a compliance attestation confirming the enforcement of PCC requirements across its vendor network,” PenCom stated. “This attestation must be updated annually and embedded in all LPFO investment documentation.”
Additionally, counterparties must submit valid PCCs from their respective vendors and service providers before any investment transactions with LPFOs can proceed, including transactions involving commercial papers, bond issuances, and fixed-income placements with financial institutions.
Institutional Accountability Extended to Parent Companies
PenCom further clarified that this compliance framework extends to the parent companies, subsidiaries, holding companies, and institutional shareholders of LPFOs. These entities must also present valid PCCs and ensure that all engaged vendors and service providers adhere to the same compliance criteria before any contractual engagement.
To ensure seamless adoption, PenCom has granted a six-month transition window from the date of the directive’s issuance, within which LPFOs are expected to incorporate these requirements into their internal policies, vendor onboarding procedures, due diligence frameworks, and governance protocols.
Driving Enforcement Through Investment and Vendor Policy Reform
This directive marks a significant step in aligning pension fund operations with broader national efforts to enforce compliance, enhance transparency, and ensure long-term sustainability of the pension scheme.
By embedding the PCC requirement into investment risk assessment and corporate governance systems, PenCom is sending a clear message that regulatory compliance is not optional—it is foundational to doing business with Nigeria’s pension industry.
Comments