The National Pension Commission has directed Licensed Pension Fund Operators to stop doing business with vendors and service providers that do not remit pension contributions for their employees.
The move was part of efforts to boost compliance with the Contributory Pension Scheme (CPS).
In a statement made available to Channel Network Afrique, CNA, the directive targets both Pension Fund Administrators and Pension Fund Custodians mandates only companies with valid Pension Clearance Certificates issued by PenCom can be engaged for services or investment transactions.
PenCom said the directive was in accordance with Section 2 of the Pension Reform Act 2014, which compels all employers both public and private, to enroll in the CPS and remit pension contributions no later than seven working days after salary payments.
“The directive 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.
“Despite continuous engagement and enforcement measures, a significant number of employers remain non-compliant with this legal obligation.
“PenCom intensified its regulatory actions by appointing Recovery Agents (RAs) to audit defaulters, recover outstanding contributions, and enforce sanctions,” the statement read.
The commission noted that the new directive would further strengthen enforcement, promote transparency, and expand pension coverage.
“Accordingly, a six (6) month transition window from the date of issuing the above directives to LPFOs has been granted to allow full implementation,” the statement added.
PenCom further outlined other compliance requirements for LPFOs.
“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.
“LPFOs have been directed to integrate these requirements into their internal policies, vendor selection processes, due diligence procedures, governance, and investment risk assessment frameworks.
“The Parent Companies, Subsidiaries, Holding Companies and Institutional Shareholders of LPFOs shall possess valid Pension Clearance Certificate (PCC) and ensure that every vendor and service provider engaged by them complies with the requirement of the PCC as a precondition for entering into any Service Level or Technical Agreement. The requirement for compliance attestation is also applicable to the categories,” the statement concluded.