The National Pension Commission (PenCom) and the National Insurance Commission (NAICOM) have jointly issued a directive mandating insurance companies and their vendors to ensure full compliance with Nigeria’s pension and insurance regulations.
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, aims to strengthen adherence to the Pension Reform Act (PRA) 2014 and the Nigerian Insurance Industry Reform Act (NIIRA) 2025.
The circular emphasises compliance with the Contributory Pension Scheme (CPS) and the requirement for all employers to provide Group Life Assurance (GLA) cover for employees.
Section 2 of the PRA 2014 mandates every employer in the public and private sectors to participate in the CPS, remit pension deductions no later than seven working days after salary payment, and maintain life insurance cover for workers.
Despite continuous audits and sanctions by PenCom, a significant number of employers including some in the financial services sector — have remained in breach of these obligations. To address this, PenCom said it has engaged Recovery Agents to audit defaulting employers and recover outstanding pension contributions and penalties through legal means.
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Under the new rules, 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.
Similarly, vendors, service providers, and counterparties doing business with insurance companies must hold valid PCCs and GLA Certificates as a prerequisite for any contractual agreement.
The directive also extends to investment activities including commercial papers, bond issuances, and bank placements requiring all counterparties to sign a Compliance Attestation confirming that their vendors and service providers are also compliant.
This cascading requirement ensures that pension and insurance compliance runs throughout the investment value chain, preventing any entity in the insurance ecosystem from operating outside the law.
Insurance firms must now integrate these compliance obligations into their internal policies, vendor selection criteria, due diligence, and risk assessment processes. Parent companies, subsidiaries, holding firms, and institutional shareholders of insurance entities are also expected to demonstrate full compliance before any business transaction is approved.
Acknowledging the operational adjustments required, 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 update their governance structures, inform vendors of the new requirements, and align internal procedures with the directive.
The joint enforcement initiative is expected to enhance transparency, accountability, and sustainability in Nigeria’s pension and insurance sectors, reinforcing confidence in the country’s regulatory framework.
