Photo caption: PenCom logo
By Charles Okonji
The National Pension Commission (PenCom) has stated that licensed operators and vendors who fail to comply with its obligations would face the long-arm of the law after a six-weeks window.
This was in line with the ongoing efforts geared towards expanding coverage of the Contributory Pension Scheme (CPS).
To this end, PenCom has issued a new directive to all Licensed Pension Fund Operators (LPFOs), comprising Pension Fund Administrators PFAs) and Pension Fund Custodians (PFCs) for a strict compliance.
The directive prohibits transacting with service providers and vendors that do not remit pensions for their employees as evidenced by a Pension Clearance Certificate issued by PenCom.
According to the directive; “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; “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.”
Accordingly, a six (6) month transition window from the date of issuing the above directives to LPFOs has been granted to allow full implementation.
