PenCom, NAICOM Enforce Stricter Compliance with Pension and Insurance Laws

By Oluwakemi Kindness

The National Pension Commission (PenCom) and the National Insurance Commission (NAICOM) have jointly issued a directive mandating full compliance with Nigeria’s pension and insurance regulations across the insurance industry and its value chain.

The directive, contained in a Joint Circular on Wednesday signed by Abdulrahaman Muhammad Saleem, Director of Surveillance at PenCom, and Talmiz Usman, Director of Legal, Enforcement and Market Development at NAICOM, seeks to reinforce adherence to the Pension Reform Act (PRA) 2014 and the Nigerian Insurance Industry Reform Act (NIIRA) 2025.

The new measure focuses on enforcing compliance with the Contributory Pension Scheme (CPS) and the mandatory Group Life Assurance (GLA) coverage for employees.

Under Section 2 of the PRA 2014, every employer in both public and private sectors is required to participate in the CPS, remit pension deductions within seven working days after salary payment, and maintain life insurance coverage for staff.

Despite repeated engagements, audits, and sanctions, PenCom noted that many employers, including those within the financial services industry, continue to violate these legal obligations.

To address the persistent breaches threatening the sustainability of the CPS, PenCom has appointed Recovery Agents to audit defaulters, impose sanctions, and pursue judicial recovery of outstanding contributions and penalties.

With the new joint circular, PenCom and NAICOM have intensified enforcement. All Licensed Insurance Companies (LICs) must now possess valid Pension Clearance Certificates (PCCs) issued by PenCom and Group Life Assurance Certificates compliant with NIIRA 2025 before undertaking any operational or investment activity.

Vendors, service providers, and counterparties seeking to do business with insurance companies are also required to present valid PCCs and GLA Certificates as preconditions for contracts.

The directive extends to all investment transactions, including commercial papers, bond issuances, and bank placements, requiring counterparties to submit a Compliance Attestation confirming that their own vendors and service providers are equally compliant.

This cascading compliance framework embeds pension and insurance accountability throughout the entire insurance ecosystem, ensuring that no entity operates outside legal provisions.

Insurance firms are mandated to integrate these requirements into their internal policies, vendor selection processes, due diligence, and investment risk assessments.

Parent companies, subsidiaries, holding firms, and institutional shareholders must also demonstrate full compliance before any business engagement is approved.

To facilitate smooth adoption, 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 update governance structures, align internal systems, and communicate compliance expectations to all vendors and partners.