The National Pension Commission (PenCom) has issued a directive instructing all Licensed Pension Fund Operators (LPFOs), including Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs), to cease doing business with vendors and service providers that fail to remit pension contributions for their employees. This directive mandates that only companies holding valid Pension Clearance Certificates (PCC) issued by PenCom can be engaged for services or investment transactions.

PenCom's directive aligns with Section 2 of the Pension Reform Act 2014, which requires all employers, both public and private, to enroll in the Contributory Pension Scheme (CPS) and remit pension contributions no later than seven working days after salary payments. The commission has expressed serious concerns about the continued patronage of defaulting service providers, emphasizing that such actions contravene the Pension Reform Act 2014. Operators are warned to avoid engaging with any entity that does not fulfill its pension obligations to its employees.

To strengthen enforcement, promote transparency, and expand pension coverage, PenCom requires LPFOs to invest only in companies and financial institutions that demand PCCs from their vendors and service providers. Counterparties must sign annual compliance attestations confirming PCC enforcement across their vendor networks and provide PCCs from their own vendors before any investment transactions are approved, including those involving commercial papers, bonds, or bank placements. These directives must be embedded in internal policies, vendor selection criteria, governance, and risk assessment frameworks.

An industry expert, Adegbero Ogunyelu, welcomed the move, describing it as timely and necessary, stating that it would compel employers to take their pension responsibilities more seriously. Another pension consultant, Sunday Aderibole, supports the directive, adding that the move will strengthen the integrity of the pension system in the country and protect the future of Nigerian workers.

PenCom has reiterated its commitment to protecting the interests of Retirement Savings Account (RSA) holders and ensuring full compliance within the industry. The commission warned that any operators violating the directive would face regulatory sanctions, including fines and possible license suspension. It also advised members of the public and employees to report any employer failing to remit pension contributions via its official website or whistleblower channels, emphasizing that this is a collective responsibility.

PenCom has provided a six-month transition period to allow all LPFOs and relevant stakeholders to fully comply with the new directive. The commission appointed Recovery Agents (RAs) to audit defaulters, recover outstanding contributions, and enforce sanctions, intensifying its regulatory actions.