PenCom, NAICOM Tighten Compliance Rules, Bar Insurers from Dealing with Defaulting Employers

By LOVETH AZODO,  Lagos

The National Pension Commission (PenCom) and the National Insurance Commission (NAICOM) have jointly ordered insurance companies to stop doing business with employers that fail to comply with Nigeria’s pension and insurance laws, in what marks one of the strongest enforcement actions yet to protect workers’ rights and strengthen financial governance in the country.

In a new 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, both regulators directed insurance firms and their vendors to ensure full compliance with the Pension Reform Act (PRA) 2014 and the Nigerian Insurance Industry Reform Act (NIIRA) 2025.

The directive focuses on enforcing the Contributory Pension Scheme (CPS) and ensuring all employers maintain Group Life Assurance (GLA) cover for their employees as mandated by law.

Section 2 of the PRA 2014 requires every employer in both public and private sectors to participate in the CPS, remit employee pension deductions within seven working days of salary payment, and provide a valid life insurance policy for staff.

However, despite years of engagement, audits, and sanctions, many employers including some in the financial services industry have continued to flout these rules.

PenCom disclosed that recovery agents had been deployed to audit and recover unpaid pension contributions, but persistent non-compliance has now prompted a broader joint enforcement framework with NAICOM.

Under the new directive, all licensed insurance companies must obtain valid Pension Clearance Certificates (PCCs) from PenCom and compliant GLA Certificates under NIIRA 2025 before engaging in any operational or investment activities.

Vendors, service providers, and counterparties dealing with insurers are also required to present valid PCCs and GLA Certificates before contracts can be executed.

The directive extends beyond insurance operations to investment transactions such as commercial papers, bond issuances, and bank placements.

All counterparties involved in such dealings must sign compliance attestations confirming that their own vendors and partners are also fully compliant creating a cascading system that embeds pension and insurance compliance throughout the value chain.

Insurance companies are equally required to integrate these new compliance rules into their internal governance, vendor selection, and investment risk assessment frameworks.

Parent companies, subsidiaries, and institutional shareholders of insurance entities must also demonstrate full compliance before any business relationship can proceed.

To ensure a smooth transition, PenCom and NAICOM have granted a six-month compliance window for insurers to align internal processes, update policies, and notify all vendors and partners of the new requirements.

Industry observers say the directive could reshape Nigeria’s compliance culture, enforcing long-overdue accountability in employer contributions and employee protection.

If successfully implemented, analysts believe it will strengthen the credibility of both the pension and insurance industries two pillars of the nation’s financial system.