The National Pension Commission has issued a fresh order to all Licenced Pension Fund Operators (LPFOs) on compliance with the Contributory Pension Scheme.
PenCom disclosed this in a statement on Thursday.
The directive prohibits LPFOs comprising Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) from transacting with service providers and vendors that do not remit pensions for their employees as evidenced by a Pension Clearance Certificate issued by the Commission.
The Commission stated that the directive is in line with Section 2 of the PRA 2014, which 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.
PenCom lamented that despite its enforcement efforts in the past years significant number of employers remain non-compliant.
To strengthen compliance PenCom has issued the directive that 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 a 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,”;; the statement containing the directive reads.
