Vendors and service providers without evidence of pension remittance compliance will no longer be able to deal with operators in the industry, the National Pension Commission (PenCom) has declared.
The ban is in furtherance of the ongoing efforts to expand the coverage of the Contributory Pension Scheme (CPS).
Consequently, PenCom has issued a new directive to all Licensed Pension Fund Operators (LPFOs), comprising Pension Fund Administrators PFAs) and Pension Fund Custodians (PFCs).
The new directive that was issued on Thursday night prohibits transacting with service providers and vendors that do not remit pensions for their employees as evidenced by a Pension Clearance Certificate issued by PenCom.
Section 2 of the PRA 2014 mandates all employers in the public and private sectors—including Federal, State, and Local Governments—to participate in the Contributory Pension Scheme (CPS) and remit pension contributions no later than seven (7) working days after salary payments.
Accordingly, a six month transition window from the date of issuing the directives to LPFOs was therefore granted to allow full implementation.
PenCom said despite continuous engagement and enforcement measures, a significant number of employers remain non-compliant with the legal obligation. PenCom said it intensified its regulatory actions by appointing recovery agents to audit defaulters, recover outstanding contributions, and enforce sanctions.
To further strengthen enforcement, improve compliance, and broaden pension coverage, the commission dire Ted that: “All LPFOs shall ensure that any vendor or service provider they engage presents a valid Pension Clearance Certificate (PCC) issued by the Commission as a condition for entering into or renewing Service Level or Technical Agreements.”
LPFOs must also ensure that investments are made only with companies and financial institutions that require PCCs from their own vendors and service providers.
“Every Counterparty must execute a Compliance Attestation, confirming that it enforces the PCC requirement across its vendor network. This attestation must be updated annually and included in LPFO investment documentation.
“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.”
The commission said in a statement that the parent companies, subsidiaries, holding companies and institutional shareholders of LPFOs will have to possess valid pension clearance certificate and ensure that every vendor and service provider engaged by them complies with the requirement of the PCC.
