The National Pension Commission (PenCom) has continued its robust enforcement of the Pension Reform Act (PRA) 2014, demonstrating a steady increase in compliance by Nigerian employers. As of January 22, 2025, PenCom had already issued 1,866 Pension Compliance Certificates (PCCs), a crucial document signifying adherence to the PRA 2014. These certificates, valid for the entire calendar year of 2025, are awarded to organizations that meet the stipulated criteria for employee pension contributions and management. The swift issuance at the beginning of the year underscores PenCom’s proactive approach to ensuring timely compliance and highlights the growing awareness among employers about the importance of the Contributory Pension Scheme (CPS). The range in employee numbers, from three to nearly two thousand, reflects the broad applicability of the PRA 2014 across various organizational sizes and sectors.
The PRA 2014 mandates that all organizations with three or more employees participate in the CPS, a system designed to provide a sustainable and secure retirement income for employees. The PCC acts as a proof of compliance with this mandate. The certificates issued acknowledge the compliance of these 1,866 employers, showcasing their commitment to securing their employees’ financial futures. Noteworthy examples include major financial institutions like Stanbic IBTC Bank Plc, with 1,976 employees and a substantial contribution of N1.83 billion, as well as other prominent players like Presco Plc and Providus Bank Limited, demonstrating the cross-sector adoption of the CPS. These large contributions signify the significant financial resources being channeled towards retirement savings, solidifying the CPS’s role in national financial security.
The PCC initiative, introduced by PenCom in 2012, is a key tool in driving compliance with the PRA 2014. It serves not only as a confirmation of an organization’s adherence to the law but also as a critical requirement for businesses seeking government contracts. Ministries, departments, and agencies of the federal government demand the PCC as a prerequisite for awarding contracts, effectively incentivizing private sector compliance. This linkage between compliance and access to government business provides a powerful motivator for organizations to participate fully in the CPS, thus expanding its reach and impact.
The process of obtaining a PCC entails several key steps that ensure the effective implementation of the CPS. Firstly, employers must facilitate the opening of Retirement Savings Accounts (RSAs) for their employees with licensed Pension Fund Administrators (PFAs). This ensures that each employee has a dedicated account to receive and manage their pension contributions. Secondly, employers are obligated to remit both their own contributions and the deducted employee contributions to the designated Pension Fund Custodians (PFCs) within seven working days of salary payment. This timely remittance ensures the consistent growth of employee retirement savings and reinforces the reliability of the system.
Beyond the core requirements of RSA registration and timely remittances, the process involves additional stipulations for employers with pre-existing pension schemes. Such employers are required to transfer all accumulated pension funds and assets from these older schemes to licensed pension operators under the CPS. This ensures the consolidation of pension funds under a regulated and transparent framework, safeguarding employee savings and streamlining the pension landscape. Finally, a crucial component of the compliance criteria is the provision of a group life insurance policy for all employees. This policy must provide coverage equivalent to at least three times the annual total emoluments of each employee, offering an added layer of financial security in the event of unforeseen circumstances.
The steady rise in the number of issued PCCs year-on-year is a testament to PenCom’s effective regulatory oversight and the increasing recognition of the CPS’s importance. The figure of over 38,000 PCCs issued in 2024 represents a significant jump from the 30,293 issued in 2023, indicating a growing trend of compliance. This upward trajectory reflects PenCom’s ongoing efforts to educate employers and employees about the benefits of the CPS and the stringent enforcement of the PRA 2014. The consistent increase in compliance not only strengthens the pension system but also contributes to broader financial stability within the Nigerian economy, securing the financial future of a growing workforce and ultimately fostering economic growth.
