By Elizabeth Christopher, Abuja
The National Pension Commission (PenCom) and the National Insurance Commission (NAICOM) have jointly issued a directive compelling insurance companies and their vendors to fully comply with Nigeria’s pension and insurance laws.
The new directive, contained in a Joint Circular signed by Abdulrahaman Muhammad Saleem, Director of the Surveillance Department at PenCom, and Dr. 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 focuses on compliance with the Contributory Pension Scheme (CPS) and the requirement for all employers to maintain Group Life Assurance (GLA) coverage for their employees.
Under Section 2 of the PRA 2014, every employer in the public and private sectors must participate in the CPS, remit pension deductions no later than seven working days after salary payment, and provide life insurance cover for employees.
However, despite continuous engagements, audits, and sanctions by PenCom, a significant number of employers, including some within the financial services industry, have remained in breach of these legal obligations.
PenCom stated that it has engaged Recovery Agents to audit defaulting employers, enforce administrative measures, and recover outstanding pension contributions and penalties through legal channels. The collaboration with NAICOM is expected to further boost compliance, reinforcing the sustainability and credibility of the CPS.
By this new circular, going forward, all Licensed Insurance Companies (LICs) must possess valid Pension Clearance Certificates (PCCs) from PenCom and Group Life Assurance Certificates compliant with NIIRA 2025 before engaging in any operational or investment activity.
Every vendor, service provider, and counterparty that seeks to do business with insurance companies must also hold valid PCCs and GLA Certificates as a precondition for any contractual agreement.
The directive further extends to investment transactions, including commercial papers, bond issuances, and bank placements. All counterparties involved must execute a Compliance Attestation, affirming that their own vendors and service providers also maintain valid PCCs and GLA Certificates.
This cascading requirement effectively embeds pension and insurance compliance throughout the investment value chain, ensuring that no entity within the insurance ecosystem operates outside the law.
Insurance firms are also required to integrate these compliance requirements into their internal policies, vendor selection, due diligence, and investment risk assessment frameworks.
Similarly, parent companies, subsidiaries, holding firms, and institutional shareholders of insurance entities must demonstrate full compliance before any business dealings are approved.
Recognising the operational adjustments that the new measures demand, PenCom and NAICOM have granted a six-month transition window from the date of the circular to enable full implementation.
During this period, insurance companies are expected to align their internal processes, communicate compliance expectations to vendors, and update their governance frameworks accordingly.