By Atoyebi Nike
The National Pension Commission (PenCom) has issued a new directive prohibiting Pension Fund Operators from conducting business with vendors or service providers that fail to comply with pension remittance obligations.
The commission said the move is part of broader efforts to enforce compliance with the Contributory Pension Scheme (CPS) and to expand its coverage across both public and private sectors.
Under the new policy, all Licensed Pension Fund Operators (LPFOs)—which include Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs)—must now ensure that any vendor or service provider they engage presents a valid Pension Clearance Certificate (PCC) issued by PenCom. This requirement also applies to the renewal of existing service agreements.
The directive, which became effective on Thursday, provides a six-month transition period for full implementation. According to PenCom, despite ongoing enforcement and stakeholder engagement, many employers remain non-compliant with the provisions of the Pension Reform Act (PRA) 2014, which mandates pension remittances within seven working days of salary payments.
To improve compliance, the commission said it has ramped up enforcement by deploying recovery agents to audit defaulters, recover outstanding contributions, and apply sanctions where necessary.
PenCom also extended the PCC requirement to the investment activities of LPFOs. All counterparties in investment transactions—including those involving commercial papers, bond issuances, and bank placements—must present valid PCCs from their vendors or service providers.
Additionally, each counterparty must sign a Compliance Attestation confirming enforcement of PCC compliance throughout their vendor network. This attestation must be updated annually and included in the LPFO’s investment records.
In a further tightening of enforcement mechanisms, PenCom stated that parent companies, subsidiaries, holding companies, and institutional shareholders of LPFOs must also possess valid PCCs and ensure their engaged vendors meet the same requirements.
The commission emphasized that these directives are intended to institutionalize pension compliance across the supply chain and financial ecosystem, enhancing transparency and protecting workers’ retirement benefits.
This latest policy is expected to drive accountability and expand the pension scheme’s reach, especially among businesses previously operating outside the regulatory framework.
