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Home Sectors Legal & Regulations

PenCom directive triggers industry-wide demand for Pension Clearance Certificates to ensure accountability 

Israel Ojoko by Israel Ojoko
August 12, 2025
in Legal & Regulations, Sectors
National Pension Commission
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A recent directive from the National Pension Commission (PenCom) has triggered a wave of compliance activity across Nigeria’s corporate landscape, as companies begin demanding Pension Clearance Certificates (PCCs) from vendors and service providers.

The move follows PenCom’s six-month deadline issued to Licensed Pension Fund Operators (LPFOs), requiring them to enforce PCC compliance across their entire business ecosystem, including vendors, parent companies, subsidiaries, and institutional shareholders.

The directive, first issued in May 2025, aims to strengthen adherence to the Pension Reform Act (PRA) 2014, which mandates all employers in both public and private sectors to participate in the Contributory Pension Scheme and remit pension contributions no later than seven working days after salary payments.

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“The Parent Companies, Subsidiaries, Holding Companies and Institutional Shareholders of Licensed Pension Fund Operators shall possess valid Pension Clearance Certificates 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,” read the circular signed by A.M. Saleem, Head of PenCom’s Surveillance Department.

Companies Begin Enforcing Compliance 

In response to the directive, companies across various sectors have begun issuing formal notices to vendors, requesting valid PCCs as a condition for continuing or initiating service agreements.

Sources familiar with the matter confirmed that letters have already been dispatched to vendors, urging them to comply within the stipulated timeframe.

As of May 15, PenCom had issued 21,978 Pension Clearance Certificates to employers across Nigeria, spanning industries such as finance, manufacturing, telecommunications, and professional services. The PCC serves as official confirmation that an organization is fulfilling its pension obligations to employees and is a prerequisite for bidding on government contracts.

“The directive arose from observing that a significant number of employers remain non-compliant with this legal obligation,” PenCom stated, referencing Section 2 of the PRA 2014.

Broader Implications for Investment and Contracting 

Beyond vendor relationships, PenCom’s directive has far-reaching implications for investment practices within LPFOs. The Commission now requires that investments be made only with companies and financial institutions that themselves demand PCCs from their vendors and service providers. This cascading compliance model is designed to embed pension accountability throughout the financial and corporate ecosystem.

To formalize this process, PenCom mandates that 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.

Strengthening Pension Governance Nationwide 

The directive is part of PenCom’s broader strategy to enhance pension governance and ensure that employers meet their statutory obligations under the PRA 2014. By linking PCC compliance to service agreements and investment eligibility, the Commission is leveraging regulatory influence to drive systemic change.

Industry observers note that the move could significantly improve pension contribution rates and reduce default risks, especially among private sector employers.

It also reinforces the role of LPFOs as gatekeepers of pension integrity, with the responsibility to enforce compliance not only within their operations but across their entire network of business relationships.


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Tags: National Pension CommissionPension Clearance Certificates
Israel Ojoko

Israel Ojoko

Israel Ojoko is a dynamic journalist renowned for his in-depth coverage and insightful analysis on a diverse range of topics. With a keen eye for detail and a passion for storytelling, Israel has penned impactful articles on the economy, political developments, fintech, and cybersecurity, among many others. His dedication to uncovering the multifaceted narratives has established him as a trusted voice and influential figure in contemporary journalism.

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Comments 1

  1. Ajose Dada says:
    August 14, 2025 at 4:19 am

    Satisfactory

    Reply

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