The National Pension Commission (PenCom) has issued a fresh directive to all Licensed Pension Fund Operators (LPFOs) in Nigeria, mandating them to transact only with service providers and vendors that comply with the Contributory Pension Scheme (CPS).

In a statement released on Thursday, PenCom prohibited Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) from engaging with companies that fail to remit pensions for their employees. Compliance will be evidenced by a Pension Clearance Certificate issued by the Commission.

The directive aligns with Section 2 of the Pension Reform Act (PRA) 2014, which requires all employers in both public and private sectors—including federal, state, and local governments—to participate in the CPS and remit pension contributions within seven working days after salary payments.

According to PenCom, despite previous enforcement efforts, a significant number of employers remain non-compliant with the scheme, necessitating stronger measures.

Under the new requirements, LPFOs must ensure that investments are made only with companies and financial institutions that also require Pension Clearance Certificates 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," the statement read.

The Commission further directed that counterparties must submit valid PCCs from their own vendors and service providers before engaging in any investment transaction with LPFOs, including those involving commercial papers, bond issuances, and bank placements.

LPFOs have been instructed to integrate these requirements into their internal policies, vendor selection processes, due diligence procedures, governance, and investment risk assessment frameworks.

Additionally, parent companies, subsidiaries, holding companies, and institutional shareholders of LPFOs are required to possess valid PCCs and ensure compliance from their vendors and service providers.

PenCom has granted a six-month transition window from the date of issuing the directives to allow for full implementation by all affected parties.

This move represents a significant step in strengthening Nigeria's pension system and ensuring that employers fulfill their obligations to employees' retirement security.