…grants operators six months to enforce vendor compliance rules
The National Pension Commission (PenCom) has issued a new directive requiring all Licensed Pension Fund Operators (LPFOs) to ensure that vendors and service providers present a valid Pension Clearance Certificate (PCC) before entering into or renewing any agreements.
According to a statement by the commission, the directive, which applies to both Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs), prohibits transactions with any service provider that fails to remit pensions for its employees, as required under the Pension Reform Act (PRA) 2014.
Section 2 of the PRA mandates all employers in both public and private sectors to participate in the CPS and remit contributions no later than seven working days after salary payments.
The commission noted that the move is to strengthen compliance with the Contributory Pension Scheme (CPS) and expand its coverage.
It said that despite previous efforts by PenCom to engage and enforce compliance, a significant number of employers remain in breach of this legal obligation. In response, PenCom has intensified enforcement measures, including appointing Recovery Agents to audit and recover outstanding pension contributions.
The latest directive introduces several layers of enforcement which includes;, All vendors and service providers engaged by LPFOs must possess valid PCCs as a prerequisite for contract engagement or renewal.
LPFOs are required to ensure that companies and financial institutions they invest also demand PCCs from their vendors.
All counterparties must execute a Compliance Attestation confirming they enforce PCC requirements across their vendor networks. This attestation must be updated annually, the commission noted
“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,” the statement reads.
To facilitate a smooth transition, PenCom has granted LPFOs a six-month implementation window to integrate the new requirements into their operations.
