PenCom Tightens Pension Rules, Boosts Transparency with ₦4.57bn Recovery

The National Pension Commission (PenCom) has introduced sweeping reforms to standardize how pension fund operators calculate and report investment performance. The move is being hailed as a major step toward strengthening transparency, protecting workers’ savings, and reshaping Nigeria’s pension landscape.

According to the report endorsed and released by A.M. Saleem, Head of Surveillance at PenCom, the directive took effect on July 1, 2025, and applies across all licensed Pension Fund Operators (PFOs). By enforcing a uniform framework, PenCom aims to reduce short-term, speculative decision-making by Pension Fund Administrators (PFAs) and encourage more sustainable, long-term strategies.

What It Means for Workers

For Nigerian workers, the reforms go beyond technical adjustments—they touch the heart of retirement security. By mandating that PFAs calculate returns using a 36-month rolling window, PenCom ensures that pension performance reflects long-term stability rather than short-lived market swings.

Workers can now expect clearer, more reliable information about how their pensions are performing. With monthly reports required to be published on operators’ websites, contributors will have easier access to data that was once buried in complex financial documents. This transparency means workers can compare funds, make informed choices, and hold their PFAs accountable.

How Employers Are Affected

Employers, too, are squarely in PenCom’s spotlight. Between Q1 2024 and Q1 2025 alone, the regulator recovered ₦4.57 billion from employers who defaulted on pension remittances. This included ₦2.12 billion in outstanding contributions and ₦2.45 billion in penalties from 138 erring organizations.

The new rules send a clear message: compliance is non-negotiable. Employers who fail to remit contributions risk not only stiff financial penalties but also reputational damage in a system that is becoming increasingly transparent. On the flip side, compliant organizations will benefit from greater trust among employees and improved relations with regulators.

Why Transparency Matters for the Future of Pensions

Nigeria’s pension industry, valued in trillions of naira, plays a critical role in the nation’s financial system. Yet, questions of trust have long dogged the sector. By requiring PFAs to disclose not just returns but also risk measures like the Sharpe Ratio, PenCom is pushing the industry closer to international standards.

Transparency builds confidence—not only among contributors but also within the wider investment community. With clearer benchmarks and consistent reporting, pension funds are better positioned to attract long-term capital, support infrastructure projects, and contribute to national economic growth.

How Nigeria Compares Globally

PenCom’s reforms reflect a global push toward pension accountability. Other emerging and developed economies have already set benchmarks that Nigeria is now moving to match.

• South Africa: The Financial Sector Conduct Authority (FSCA) requires retirement funds to publish performance and cost disclosures under its “Retirement Fund Default Regulations.” Nigeria’s new monthly disclosure rules mirror this spirit of transparency, though South Africa is more advanced in revealing investment costs.
• Chile: A pioneer in pension reforms, Chile mandates online dashboards where contributors can compare fund performance, fees, and risk. PenCom’s requirement for Sharpe Ratio reporting and rolling 36-month returns puts Nigeria closer to Chile’s long-term, comparability-driven model.

By aligning with these global practices, Nigeria signals its intent to build a pension system that meets international benchmarks for accountability and trust.

Voices from the Industry

Adding human perspectives highlights how the reforms are being received across the board:

• The Expert’s View:
  “Nigeria’s pension reforms are catching up with international standards,” said financial analyst Tayo Adebayo. “By mandating Sharpe Ratios and long-term return calculations, PenCom is forcing fund managers to focus on sustainability rather than chasing quick wins.”
• The Worker’s Voice:
  For civil servant Grace Musa the changes offer reassurance. “I’ve been contributing for 12 years, but I never really understood how my fund was doing. If I can see reports online every month, it gives me more confidence that my money is safe.”
• The Employer’s Concern:
  Manufacturing executive based in Lagos acknowledged the pressure but welcomed the clarity. “Yes, compliance will cost us more in administration, but it also protects our relationship with staff. When workers trust the system, morale improves—and that helps productivity.”

With new guidelines, PenCom is reshaping Nigeria’s pension industry into one that is more transparent, accountable, and globally competitive. Workers gain confidence, employers face stricter oversight, and the economy benefits from a pension system built for the long haul.