The National Pension Commission (PenCom) has granted Pension Fund Administrators (PFAs) the authority to appoint external auditors and actuaries for Approved Existing Schemes (AES) and Additional Benefits Schemes (ABS). The directive, issued in the regulator’s latest circular to all licensed PFAs, was signed by A. M. Saleem, Director of the Surveillance Department.
PenCom explained that the measure follows the repeated failure of Trustees and Sponsor Companies of pension schemes to fulfill their statutory obligation to engage external auditors and actuaries, as required under Nigerian law.
Under Section 50(2) of the Pension Reform Act (PRA) 2014, employers operating Defined Benefits Schemes must conduct an actuarial valuation at the close of each financial year to assess the adequacy of their pension fund assets. Similarly, Section 2.1(3) of the Framework for the Establishment of ABS mandates that Trustees and Sponsor Companies of AES and ABS engage accredited actuarial firms and external auditors to carry out valuations and audits of the schemes. These provisions align with Sections 50(2) and 66(2) of the PRA 2014.
Despite these legal requirements, PenCom’s supervisory review revealed that many Trustees and Sponsor Companies of AES and ABS have consistently defaulted in appointing the required actuarial and auditing professionals. The regulator warned that such non-compliance poses a significant risk to the financial sustainability of the schemes and could compromise their ability to meet obligations to members. According to PenCom, this failure represents a direct violation of the PRA 2014 and related regulatory frameworks.
To address the compliance gap, PenCom outlined a detailed set of guidelines for PFAs:
- Notification: Two months before the end of the financial year (i.e., by 31 October), the PFA or Lead PFA of the AES/ABS must formally notify the Trustees or Sponsor Companies to appoint an external auditor and actuary.
- Reminder: If no appointment is made within 21 days of notification, the PFA is required to issue a follow-up reminder. The notice must indicate that if no formal response is received within five working days, the PFA will proceed to appoint the external auditor and actuary independently and submit the proposed terms of engagement to PenCom for approval.
- Approval: Once PenCom approves the engagement terms, the PFA must communicate the approval to the Trustees or Sponsor Companies.
- Fee Allocation: The PFA must inform the Trustees or Sponsor Companies that the costs associated with the audit and actuarial services will be charged to the scheme under management, after securing the regulator’s approval.
The circular underscores PenCom’s commitment to strengthening oversight and ensuring that pension schemes are managed in compliance with statutory requirements. By empowering PFAs to take decisive action in appointing auditors and actuaries, the regulator seeks to protect the interests of scheme members and enhance transparency and accountability in the management of pension funds.
In addition to the directive on auditors and actuaries, PenCom also instructed all Federal Government self-funded agencies whose salary structures are reflected in the National Salaries, Incomes and Wages Commission (NSIWC) circulars to implement the corresponding pension increases for eligible retirees. Agencies not listed in the NSIWC circulars are advised to liaise with the commission to determine the appropriate adjustments for their retirees.
Through these measures, PenCom aims to reinforce compliance, strengthen governance, and ensure that pension schemes operate effectively to deliver on their long-term financial commitments. The regulator’s proactive stance also signals its readiness to hold Trustees and Sponsor Companies accountable, while equipping PFAs with the tools to safeguard the financial security of pension scheme members.
