In a bold step to tighten compliance across Nigeria’s financial ecosystem, the National Pension Commission (PenCom) and the National Insurance Commission (NAICOM) have issued a joint directive ordering insurance companies to suspend business dealings with employers who fail to remit employees’ pension contributions or maintain valid group life insurance coverage as required by law.
The move, which marks a new era of inter-agency collaboration, is contained in a Joint Circular signed by Abdulrahaman Muhammad Saleem, Director of Surveillance at PenCom, and Dr. Talmiz Usman, Director of Legal, Enforcement and Market Development at NAICOM. It seeks to strengthen adherence to the Pension Reform Act (PRA) 2014 and the Nigerian Insurance Industry Reform Act (NIIRA) 2025.
Under Section 2 of the PRA 2014, all employers—both in the public and private sectors—are legally mandated to participate in the Contributory Pension Scheme (CPS), remit pension deductions within seven working days after salary payment, and provide valid Group Life Assurance (GLA) policies for their employees.
However, despite repeated audits, sanctions, and awareness campaigns, PenCom revealed that several employers, including some in the financial services industry, continue to default on these obligations. The regulators warned that this persistent non-compliance threatens the sustainability and credibility of Nigeria’s pension and insurance systems.
PenCom noted that while it had previously appointed Recovery Agents to audit and recover unpaid pension contributions, the pace of compliance remained unsatisfactory—prompting the need for this joint enforcement mechanism with NAICOM.
According to the new directive, Licensed Insurance Companies (LICs) are now required to hold valid Pension Clearance Certificates (PCCs) from PenCom and Group Life Assurance Certificates compliant with NIIRA 2025 before conducting any business or investment activities.
Furthermore, all vendors, service providers, and counterparties engaging with insurance firms must also present valid PCCs and GLA Certificates as prerequisites for contractual agreements. This compliance rule extends to all forms of financial transactions—including commercial papers, bond issuances, and bank placements—where all participating entities must sign a Compliance Attestation confirming that their partners are also compliant.
This new cascading compliance framework embeds pension and insurance accountability throughout the entire value chain, ensuring that every stakeholder—from parent companies and subsidiaries to investors—meets statutory obligations.
Both regulators have granted a six-month transition period to allow insurance companies to adjust their internal systems, update governance frameworks, and notify vendors and partners of the new compliance expectations.
The joint PenCom–NAICOM directive signals a major policy shift aimed at promoting transparency, enforcing discipline, and protecting workers’ rights within Nigeria’s formal employment sector. It also represents a concerted effort by regulators to rebuild public confidence in the nation’s pension and insurance institutions.
PenCom and NAICOM have issued a joint directive ordering insurance firms to cut business ties with employers defaulting on pension and group life insurance obligations under the PRA 2014 and NIIRA 2025, in a move to strengthen compliance and protect workers’ benefits.
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