By Kehinde Ibrahim, Lagos
IN a decisive move to enforce full compliance with Nigeria’s pension and insurance regulations, the National Pension Commission (PenCom) and the National Insurance Commission (NAICOM) have jointly issued a directive mandating strict adherence to relevant laws by insurance companies and their business partners.
The directive, contained in a Joint Circular signed by Abdulrahaman Muhammad Saleem, Director of Surveillance Department at PenCom, and Talmiz Usman, Director of Legal, Enforcement and Market Development at NAICOM, seeks to strengthen compliance with the Pension Reform Act (PRA) 2014 and the Nigerian Insurance Industry Reform Act (NIIRA) 2025.
The circular emphasizes the need for all employers to comply with provisions of the Contributory Pension Scheme (CPS) and to maintain Group Life Assurance (GLA) coverage for their employees as mandated under Section 2 of the PRA 2014. The Act requires employers in both the public and private sectors to participate in the CPS, remit pension deductions within seven working days after salary payment, and provide life insurance cover for all employees.
Despite years of monitoring, audits, and sanctions, PenCom noted that a significant number of employers, including some within the financial services sector, remain in breach of these obligations. The Commission stated that it has appointed Recovery Agents to audit defaulting employers, impose administrative sanctions, and pursue judicial recovery of outstanding pension contributions and penalties. However, persistent non-compliance continues to threaten the sustainability and credibility of the pension system, prompting this collaborative enforcement initiative with NAICOM.
Under the new directive, all Licensed Insurance Companies (LICs) are required to possess valid Pension Clearance Certificates (PCCs) issued by PenCom and compliant Group Life Assurance Certificates under NIIRA 2025 before undertaking any operational or investment activity. Furthermore, all vendors, service providers, and counterparties seeking to engage in business with insurance firms must also hold valid PCCs and GLA Certificates as a precondition for contractual agreements.
The directive extends to investment transactions such as commercial papers, bond issuances, and bank placements. All counterparties involved must execute a compliance attestation confirming that their own vendors and service providers maintain valid PCCs and GLA Certificates.
This layered compliance structure effectively embeds pension and insurance adherence across the entire investment and operational value chain, ensuring that no entity within the insurance ecosystem operates outside the law.
Insurance companies are required to incorporate these compliance provisions into their internal policies, vendor selection criteria, due diligence, and investment risk assessment frameworks. Parent companies, subsidiaries, holding firms, and institutional shareholders of insurance entities must also demonstrate full compliance before entering into any business relationships.
Acknowledging the operational adjustments required, PenCom and NAICOM have granted a six-month transition period from the date of the circular for full implementation. During this period, insurance firms are expected to align their internal systems, communicate compliance expectations to vendors, and update their governance frameworks accordingly.
The joint enforcement initiative marks a new phase in regulatory collaboration between PenCom and NAICOM, aimed at strengthening institutional accountability and safeguarding employee welfare within Nigeria’s financial services industry.
