PenCom Enforces Strict Pension Compliance for Fund Operators and Vendors

The National Pension Commission (PenCom) has issued a directive mandating that all Licensed Pension Fund Operators (LPFOs) must conduct business only with vendors and service providers who possess a valid Pension Clearance Certificate (PCC). The move is part of PenCom’s ongoing efforts to ensure full compliance with the Contributory Pension Scheme (CPS) as outlined in the Pension Reform Act 2014.

Under the new guideline, Pension Fund Administrators (PFAs), Pension Fund Custodians (PFCs), and other stakeholders operating within the pension sector are now obligated to verify that any third-party service provider they engage—whether for investment transactions, procurement, or service delivery—has obtained a PCC from PenCom. The directive extends not just to new partnerships but also to existing contracts, which must be reviewed and brought into compliance before renewal.

PenCom stated that the new compliance measures are crucial for enhancing accountability and transparency in the pension industry. The Commission explained that the PCC serves as evidence that an organization is fulfilling its statutory obligation of enrolling employees under the CPS and remitting monthly pension contributions as required by law. It also verifies that such an organization has provided life insurance coverage for its staff as mandated.

In a circular addressed to all LPFOs, PenCom made it clear that vendors without a valid PCC are to be excluded from any form of contractual agreement with pension operators. This applies not only to major vendors but also to subcontractors and service providers working under any technical or service level agreements. The commission stressed that pension operators must conduct proper due diligence before entering into business relationships.

Furthermore, PenCom has introduced a Compliance Attestation mechanism. All LPFOs are required to obtain written attestation from counterparties—such as banks, brokers, issuers of commercial papers, and other financial service firms—declaring that they, along with their own vendors and subcontractors, are in possession of valid PCCs. This attestation must be renewed annually and included as part of the due diligence documentation for investment transactions and operational contracts.

This rule also applies to institutional shareholders, parent companies, subsidiaries, and holding companies of LPFOs. These entities must also possess valid PCCs and ensure compliance across their operational value chain. PenCom clarified that non-compliance with these directives could lead to the rejection of investment proposals and other sanctions as deemed necessary by the Commission.

To allow for a smooth transition, PenCom has provided a six-month window from the date of the directive’s issuance for full implementation. LPFOs and other stakeholders are expected to take immediate steps to regularize existing agreements and educate their partners about the new requirements.

To obtain a PCC, organizations must meet several conditions. These include providing a certified list of their employees as of the end of the most recent fiscal year, submitting proof of consistent pension remittances for the past three years (or since incorporation, for newer entities), and showing evidence of a valid group life insurance policy. The pension contributions must reflect a minimum of 10 percent by the employer and 8 percent by the employee, in accordance with the PRA 2014.

Additionally, applicants must present proof that all outstanding remittances and penalties have been settled. Organizations that have defaulted in the past must clear such arrears before their PCCs can be approved. PenCom also requires a certificate from the pension fund administrator that confirms the accuracy and completeness of the submitted documents.

Applications for the PCC can be made through PenCom’s electronic portal or by visiting its headquarters in Abuja or zonal offices across the country. According to PenCom, the issuance process is transparent, and certificates will only be granted upon full compliance with all regulatory requirements.

The directive is being hailed by some stakeholders as a positive step towards expanding pension coverage and reinforcing a culture of compliance among employers. With thousands of businesses still defaulting on pension remittances or not enrolling staff in the CPS, PenCom believes that linking service eligibility to PCC ownership will create stronger incentives for employers to follow the rules.

Critics, however, have raised concerns about the readiness of vendors to meet the compliance threshold within the stipulated timeline. Some argue that smaller companies, especially in sectors such as logistics, facilities management, and marketing, may struggle to produce all the required documentation on time. In response, PenCom has urged affected companies to act promptly and seek clarification where necessary.

The pension industry in Nigeria has grown significantly over the years, with assets under management crossing ₦18 trillion as of early 2025. Despite this progress, challenges persist, including delays in remittances, lack of enforcement in the informal sector, and limited compliance among government contractors. PenCom’s new directive is seen as part of a broader strategy to plug these gaps and ensure that pension promises are kept for the millions of workers who depend on the system.

As the compliance window progresses, LPFOs are expected to review their vendor databases, conduct audits of current contracts, and issue notices to vendors without valid PCCs. PenCom has promised to continue monitoring the implementation process and provide support to stakeholders to ease the transition.

Ultimately, the Commission believes that strict enforcement of PCC requirements will help build a more resilient, transparent, and sustainable pension system—one that protects the interests of Nigerian workers and strengthens confidence in the nation’s retirement savings framework.