A new directive from the National Pension Commission (PenCom) has set off a wave of compliance activity across Nigeria’s business landscape, as companies begin insisting that vendors and service providers present valid Pension Clearance Certificates (PCCs) before doing business.
The enforcement push follows PenCom’s six-month deadline, issued in May 2025, to Licensed Pension Fund Operators (LPFOs) to implement strict PCC requirements across their entire business ecosystem including vendors, parent companies, subsidiaries, holding companies, and institutional shareholders.
The move is aimed at strengthening adherence to the Pension Reform Act (PRA) 2014, which mandates all employers in both the public and private sectors to participate in the Contributory Pension Scheme (CPS) and remit pension contributions no later than seven working days after paying salaries.
According to a circular signed by A.M. Saleem, Head of PenCom’s Surveillance Department, “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 PCC requirement as a precondition for entering into any service level or technical agreement.”
In response, companies across finance, manufacturing, telecommunications, and professional services have started issuing formal notices to their vendors, warning that future contracts will depend on proof of pension compliance. Several firms have already dispatched letters urging service providers to obtain valid PCCs within the set timeframe.
As of May 15, PenCom had issued 21,978 PCCs to employers nationwide. The certificate serves as official proof that an organisation is meeting its pension obligations and is also a mandatory requirement for bidding on government contracts. PenCom noted that the directive was necessary because “a significant number of employers remain non-compliant with this legal obligation,” citing Section 2 of the PRA 2014.
The directive extends beyond vendor relationships to investment practices. LPFOs are now required to invest only in companies and financial institutions that themselves enforce PCC compliance among their vendors. This “cascading compliance” model is designed to embed pension accountability deep within the corporate and financial ecosystem.
To formalise this process, all counterparties must sign a compliance attestation confirming they apply the PCC rule across their vendor network. This attestation must be renewed annually and included in LPFO investment documentation.
PenCom describes the directive as part of a wider strategy to strengthen pension governance and protect employees’ retirement funds. By linking pension compliance to service agreements and investment eligibility, the regulator is leveraging its oversight powers to create systemic change.
Industry analysts believe the move could sharply increase pension contribution rates, reduce defaults especially in the private sector—and position LPFOs as critical enforcers of pension integrity, not only within their own operations but throughout their extended business networks.
If fully implemented, the new rules could transform pension compliance from a back-office obligation into a core requirement for doing business in Nigeria’s corporate and financial markets.
