In a bold push to strengthen financial discipline and protect workers’ benefits, the National Pension Commission (PenCom) and the National Insurance Commission (NAICOM) have jointly directed insurance companies in Nigeria to suspend all business dealings with employers that fail to comply with statutory pension and insurance obligations.

The regulators said the directive marks a new phase of enforcement designed to close compliance gaps and reinforce accountability across the nation’s corporate sector.

In a circular, the bodies said insurance firms and their business partners must now ensure full compliance with the provisions of the Pension Reform Act (PRA) 2014 and the Nigerian Insurance Industry Reform Act (NIIRA) 2025.

The new measure specifically targets employers’ adherence to the Contributory Pension Scheme (CPS) and the mandatory Group Life Assurance (GLA) cover for employees.

Section 2 of the PRA 2014 mandates every employer, whether in the public or private sector, to participate in the CPS, remit pension contributions within seven working days of salary payment, and maintain an active life insurance policy for staff.

However, despite continuous sensitisation efforts, audits, and sanctions, several employers, including some in the financial services sector, have consistently failed to comply with these requirements.

PenCom noted that while recovery agents had been engaged to audit and recover outstanding pension contributions, persistent defaulting by some employers necessitated a more stringent joint enforcement framework with NAICOM.

Under the new directive, all licensed insurance companies are required to obtain valid Pension Clearance Certificates (PCCs) from PenCom and a compliant GLA.

They noted that all vendors, service providers, and counterparties dealing with insurers must present valid PCCs and GLA Certificates before contracts can be executed.

The regulators emphasised that this compliance rule extends beyond conventional insurance operations to cover investment transactions such as commercial papers, bond issuances, and bank placements. All counterparties in such transactions must sign compliance attestations confirming that their own vendors and partners also meet the same requirements, a cascading structure designed to embed pension and insurance compliance across the entire value chain.

In addition, insurance firms are required to integrate the new compliance provisions into their internal governance, vendor selection, and investment risk assessment frameworks. Parent companies, subsidiaries, and institutional shareholders of insurers must also provide evidence of compliance before any business relationship or investment approval can proceed.

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