NAICOM building
By David Akinmola
The National Pension Commission (PenCom) has rolled out fresh guideline to standardize how pension fund performance is calculated and reported.
In a move aimed at strengthening transparency and curbing short-termism, in Nigeria’s pension industry.
The directive, signed by Head of Surveilance at the commission, Muhammad Abdulrahman Saleem, took effect on July 1, 2025, and applies to all licensed Pension Fund Operators (PFOs). It 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 annualize the figure to four decimal places.
For unitized funds, this involves calculating the root of the ratio between ends 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 emphasized that only audited and approved opeing 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 minimizing short-term decision-making,” the commission started.
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, disclosed 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, organizations with three or more employees are legally required to remit pension contributions, warning that the regulator will continue to clamp down on defaulters across the country.
