The National Pension Commission has sparked a surge in corporate compliance after directing companies to obtain Pension Clearance Certificates from all vendors and service providers.

The order stems from a six-month deadline given in May 2025 to Licensed Pension Fund Operators, instructing them to enforce PCC compliance across their entire business network — including vendors, parent firms, subsidiaries, and institutional shareholders.

The move is designed to bolster enforcement of the Pension Reform Act (PRA) 2014, which requires all public and private employers to join the Contributory Pension Scheme and remit pension contributions within seven working days of paying salaries.

“The Parent Companies, Subsidiaries, Holding Companies and Institutional Shareholders of Licensed Pension Fund Operators shall possess valid Pension Clearance Certificates and ensure that every vendor and service provider engaged by them complies with the requirement of the PCC as a precondition for entering into any Service Level or Technical Agreement,” read the circular signed by A.M. Saleem, Head of PenCom’s Surveillance Department.

Following the directive, companies in multiple sectors have started sending formal notices to vendors, requiring valid PCCs as a prerequisite for renewing or entering into service contracts.

Sources say vendors have already begun receiving letters urging compliance within the set deadline.

As of May 15, PenCom had issued 21,978 PCCs to employers nationwide, covering sectors such as finance, manufacturing, telecommunications, and professional services. The certificate confirms that a company is meeting its pension obligations to employees and is required for bidding on government contracts, according to Nairameteics.

“The directive arose from observing that a significant number of employers remain non-compliant with this legal obligation,” PenCom stated, referencing Section 2 of the PRA 2014.

PenCom’s directive also extends beyond vendor engagement, reshaping investment protocols for LPFOs. Under the new rules, LPFOs may only invest in companies and financial institutions that, in turn, require PCCs from their own vendors and service providers.

This cascading compliance model is intended to embed pension accountability across the entire corporate and financial landscape.

To operationalize this, all counterparties must sign an annual compliance attestation confirming enforcement of the PCC requirement throughout their vendor networks, with the document incorporated into LPFO investment records.

The measure forms part of PenCom’s wider push to strengthen pension governance and ensure employers fulfil their obligations under the PRA 2014. By tying PCC compliance to both service contracts and investment eligibility, the Commission is using regulatory leverage to drive systemic reform.