Reminiscent of bulls eye on the focal point of PRA 2014 compliance the National Pension Commission PenCom is reinforcing its policy of no hiding place for service providers that lean on the pillar of non compliance while at the same time providing services for pension operators that they deny their employees.
In this wise PenCom has issued a new directive to all Licensed Pension Fund Operators (LPFOs), comprising Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs). The directive prohibits service providers and vendors effective November 23, 2025 from transacting pension services while they that do not remit pensions for their employees as evidenced by a Pension Clearance Certificate issued by PenCom.
Section 2 of the PRA 2014 mandates all employers in the public and private sectors—including Federal, State, and Local Governments—to participate in the Contributory Pension Scheme (CPS) and remit pension contributions no later than seven (7) working days after salary payments.
Despite continuous engagement and enforcement measures, a significant number of employers remain non-compliant with this legal obligation. PenCom intensified its regulatory actions by appointing Recovery Agents (RAs) to audit defaulters, recover outstanding contributions, and enforce sanctions.
To further strengthen enforcement, improve compliance, and broaden pension coverage, the Commission has issued the following directives that all LPFOs have a six (6) months transition window from the date of issuing to allow full implementation:
- All LPFOs shall ensure that any vendor or service provider they engage presents a valid Pension Clearance Certificate (PCC) issued by the Commission as a condition for entering into or renewing Service Level or Technical Agreements.
- LPFOs must also ensure that investments are made only with companies and financial institutions that require PCCs from their own vendors and service providers.
- Every Counterparty must execute a Compliance Attestation, confirming that it enforces the PCC requirement across its vendor network. This attestation must be updated annually and included in LPFO investment documentation.
- Counterparties must also submit valid PCCs from their own vendors/service providers before engaging in any investment transaction with LPFOs, including those involving commercial papers, bond issuances, and bank placements.
- LPFOs have been directed to integrate these requirements into their internal policies, vendor selection processes, due diligence procedures, governance, and investment risk assessment frameworks.
- The Parent Companies, Subsidiaries, Holding Companies and Institutional Shareholders of LPFOs shall possess valid Pension Clearance Certificate (PCC) and ensure that every vendor and service provider engaged by them complies with the requirement of the PCC as a precondition for entering into any Service Level or Technical Agreement. The requirement for compliance attestation is also applicable to the categories.
