By David Akinmola
The National Pension Commission (PenCom) has issued a strong warning to banks, financial institutions, and employers across the country, cautioning them against meddling in employees’ freedom to choose or transfer their Pension Fund Administrators (PFAs).
In a circular signed by the Head of Surveillance Department, A.M. Saleem, and addressed to all licensed pension operators and employers, PenCom raised concerns over what it described as growing unethical practices in the industry. The Commission noted that it had uncovered instances where employers particularly within the financial services sector—were pressuring their staff and third-party vendors to open Retirement Savings Accounts (RSAs) with specific PFAs, many of which are directly or indirectly linked to the employers themselves.
According to PenCom, such coercive tactics violate the Pension Reform Act (PRA) 2014, which clearly guarantees employees the right to freely choose their PFAs and manage the transfer of their RSAs without any form of interference or influence.
“This practice is unacceptable,” the Commission stated, “and constitutes a clear violation of provisions of the Pension Reform Act 2014, as well as existing regulations and circulars issued by PenCom.”
The Commission emphasized that the right to select a PFA or transfer an RSA is an exclusive and inalienable right of the employee, and must be exercised freely. It warned that any act of coercion or inducement, whether direct or subtle, undermines the credibility and transparency of Nigeria’s Contributory Pension Scheme (CPS).
PenCom further directed all Pension Fund Custodians (PFCs) and licensed PFAs to report any instance where an employer, especially those affiliated with a particular PFA, attempts to influence the pension decisions of employees or vendors.
In its directive, the Commission also reminded employers particularly financial institutions—that interfering with RSA choices amounts to a breach of fiduciary and legal obligations under the PRA 2014.
To deter future violations, PenCom announced that stiff penalties and sanctions will be imposed on defaulting organisations. These may include financial fines, regulatory restrictions such as suspending a PFA’s ability to receive transferred RSAs and even criminal prosecution of individuals or institutions found guilty of infringing on workers’ pension rights.
“The Commission will not hesitate to take strong regulatory action, including criminal proceedings, against any party involved in these unlawful acts,” PenCom warned.
This latest move comes as PenCom intensifies efforts to promote transparency and integrity in the pension industry, and to ensure that Nigeria’s growing pool of retirement savings—now valued at over ₦17 trillion—is managed in the best interests of contributors.
