PenCom Warns Employers, PFAs Over Illegal RSA Transfers and Coercion of Workers

The National Pension Commission (PenCom) has issued a stern warning to employers—particularly in the financial services sector—and Pension Fund Administrators (PFAs) over mounting reports of unethical and illegal practices involving the coercion of employees to open or transfer their Retirement Savings Accounts (RSAs).

In a circular released by the Commission, PenCom condemned the practice whereby employers or their affiliated PFAs compel employees, including contract staff and vendors, to open or move their RSAs to specific PFAs. The regulator described the trend as a direct violation of the Pension Reform Act (PRA) 2014 and relevant regulatory guidelines.

“This practice is unacceptable and constitutes a clear breach of employees’ statutory rights,” PenCom stated, citing multiple legal provisions:

• Section 11(1) of the PRA 2014 affirms that every employee has the right to open an RSA with any PFA of their choice.
• Section 13 authorizes RSA holders to transfer their accounts once a year, provided such transfers adhere to guidelines issued by the Commission.
• PenCom Circular (PENCOM/INSP/CIR/SURV/20/131), dated August 14, 2020, explicitly prohibits employers from influencing employees’ choice of PFA in any form.

According to the Commission, RSA selection and transfers are personal decisions and must not be influenced by employers or their business affiliates. PenCom noted that any form of inducement, direct or indirect—undermines the credibility of Nigeria’s Contributory Pension Scheme (CPS) and the integrity of the RSA transfer process.

The Commission also outlined a series of sanctions that will be applied to any employer or PFA found to be complicit:

• Financial penalties and regulatory actions in line with existing sanctions frameworks;
• Suspension of RSA transfer privileges, allowing the affected PFA to function only as a Transferring PFA, not a Receiving one;
• Criminal prosecution of any employer or individual infringing upon workers’ pension rights under the PRA 2014.

“Employers are hereby reminded that they are not permitted to influence the pension decisions of their employees,” the Commission stated. “Such influence or coercion, whether through employment policies, threats, or indirect pressure, is illegal.”

PenCom called on all licensed Pension Fund Operators (PFAs and Pension Fund Custodians) to refrain from any collusion with employers in soliciting or directing RSA openings or transfers. The Commission urged employees who have experienced such coercion to come forward and report violations.

The directive takes immediate effect, as PenCom reaffirmed its commitment to protecting the pension rights of Nigerian workers and maintaining a transparent, competitive pension industry.

For reports or complaints related to RSA coercion, employees can contact the National Pension Commission through its official channels at [PenCom website/contact info].

Stay informed, stay ahead with The Ameh News