Korede Ogunbunmi
In a decisive effort to expand the reach and enforcement of the Contributory Pension Scheme (CPS), the National Pension Commission (PenCom) has issued a fresh directive mandating all Licensed Pension Fund Operators (LPFOs) to stop engaging vendors and service providers who do not comply with the Pension Reform Act (PRA) 2014.
The directive, whichh targets both Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs), requires all vendors to present a valid Pension Clearance Certificate (PCC) as proof of compliance before entering or renewing contracts with LPFOs.
Section 2 of the PRA 2014 obliges all employers—public and private—to remit pension contributions within seven working days after salary payment. However, a large number of employers remain non-compliant despite ongoing enforcement measures, prompting PenCom to take more stringent actions.
Key elements of the new directive include:
Mandatory PCC requirement for all vendors and service providers engaged by LPFOs.
LPFOs must only invest in companies that demand PCCs from their own vendors.
Counterparties involved in investment transactions must provide compliance attestations and PCCs from their vendors.
The Parent and Holding Companies of LPFOs must also obtain PCCs and ensure their vendors comply.
The directive also stipulates that these requirements be embedded into LPFOs’ internal governance, risk assessment, and vendor selection processes.
A six-month transition window has been granted for full implementation, after which non-compliant parties risk disqualification from engaging with LPFOs or participating in investment transactions involving pension assets.
PenCom reaffirmed that the move is aimed at strengthening transparency, improving pension compliance, and protecting the retirement benefits of workers across Nigeria.