PenCom, NAICOM Bar Insurers From Doing Business With Defaulting Employers
The National Pension Commission (PenCom) and the National Insurance Commission (NAICOM) have jointly barred insurance companies from conducting business with employers that fail to comply with pension and insurance laws.
In a circular issued on Wednesday, both regulators directed that all Licensed Insurance Companies (LICs) must now obtain valid Pension Clearance Certificates (PCCs) from PenCom and Group Life Assurance (GLA) Certificates compliant with the Nigerian Insurance Industry Reform Act (NIIRA) 2025 before undertaking any operational or investment activity.
The circular signed by Abdulrahaman Muhammad Saleem, Director of Surveillance at PenCom, and Dr. Talmiz Usman, Director of Legal, Enforcement and Market Development at NAICOM seeks to strengthen enforcement of the Pension Reform Act (PRA) 2014 and NIIRA 2025.
Under Section 2 of the PRA, employers in both the public and private sectors are mandated to remit pension contributions within seven working days of salary payment and maintain life insurance cover for all employees.
Despite previous enforcement efforts, PenCom said a large number of companies, including some in the financial sector, continue to violate these requirements. Recovery agents have already been appointed to audit defaulters, impose sanctions, and pursue judicial recovery of outstanding contributions.
According to the new directive, insurance firms will only transact with vendors, service providers, and counterparties that also possess valid PCCs and GLA certificates. The rule applies to commercial papers, bond issuances, bank placements, and other investment activities.
The regulators said the requirement will cascade through the investment value chain, meaning every party engaging with insurance companies must also confirm compliance among their own partners.
Insurance operators must integrate the new compliance rules into internal policies, procurement processes, vendor verification systems, and risk-assessment frameworks. Parent companies, subsidiaries, and institutional shareholders of insurers will also be subject to the rules.
To support implementation, PenCom and NAICOM granted a six-month transition period for companies to adjust their systems, notify vendors, and align governance structures.
The regulators stated that the directive is aimed at protecting employees’ benefits, strengthening the contributory pension scheme, and reinforcing discipline within the insurance and pension ecosystem.
