The National Pension Commission (PenCom) has introduced new guidelines to ensure uniformity in calculating and reporting pension fund performance.

The move is aimed at strengthening transparency and curbing short-termism in Nigeria’s pension industry.

The directive, signed by the Head of Surveillance at the commission, Muhammad Abdulrahman Saleem, took effect from July 1, 2025, and applies to all licensed Pension Fund Operators (PFOs).

It is a new initiative that replaces sections of the existing regulation on the valuation of pension fund assets. Under the new framework, Pension Fund Administrators (PFAs) must compute investment returns using a rolling 36-month period and annualise the figure to four decimal places.

For unitised funds, this involves calculating the root of the ratio between the end and beginning accounting unit values. Non-unitised funds such as Approved Existing Schemes CALS), Closed Pension Fund Administrators (CPFAs), and Additional Benefit Schemes (ABS) must adopt the Time-Weighted Return (TWR) method to ensure uniformity across fund structures.

The guideline further requires PFAs to publish monthly performance reports by the 10th of each month on their websites. These reports must also include the Sharpe Ratio, calculated with the three-year average yield of the 10-year Federal Government bond as a benchmark for risk-adjusted returns.

PenCom emphasised that only audited and approved opening values will be accepted in these computations, underscoring its push for accuracy and accountability.

“This circular is intended to ensure transparency and encourage sustainable, long-term investment strategies by minimising short-term decision-making,” the commission stated.

The new rules arrive as PenCom intensifies efforts to enforce compliance across the industry. Just last week, the Chief Executive Officer of the Pension Fund Operators Association of Nigeria (PenOp), Oguche Agudah, stated that the commission had recovered N4.57 billion from defaulting employers between the first quarter of 2024 and the first quarter of 2025.

The recovery included N2.12 billion in unremitted contributions and N2.45 billion in penalties imposed on 138 firms. Agudah reminded employers that under Nigerian law, organisations with three or more employees are legally required to remit pension contributions, warning that the regulator would continue to clamp down on defaulters across the country.