The National Pension Commission (PenCom) has released new guidelines banning significant cross-shareholding among Pension Fund Operators (PFOs). The move, which became effective immediately on Friday, is aimed at promoting transparency, improving corporate governance, and protecting the pension assets of contributors.
According to the new regulation, significant cross-shareholding occurs when a major shareholder in a licensed pension operator, known as a Licensed Pension Fund Operator (LPFO), acquires or attempts to acquire at least five per cent ownership in another licensed operator. The Commission explained that such ownership could arise directly or indirectly through various means, including mergers, acquisitions, conversion of debt to equity, transmission of shares through inheritance, or other legal processes.
PenCom stressed that the restriction applies no matter how the stake is acquired. The aim is to ensure that no individual, company, or related party has control of five per cent or more shares in more than one LPFO. The Commission also clarified that the rule extends to affiliates, holding companies, subsidiaries, directors, employees, spouses, and family members of the shareholder or applicant company.
In a statement, the regulator said: “No person shall hold, or continue to hold, or otherwise enter into any arrangement or agreement that would result in holding or continuing to hold a significant cross-shareholding.”
For cases where such cross-shareholding already exists, PenCom has given affected parties a six-month transition period to comply. Those who acquired such stakes by law or other means after the effective date will also be required to divest within six months.
The Commission warned that any agreement or arrangement that violates the guidelines will be declared void. Furthermore, any shares acquired in breach of the rules will not grant voting rights, dividends, or participation in the governance of the pension firm. The affected operator will also not recognise or record such shares. PenCom added that violators would face penalties under its sanction framework.
Alongside this, PenCom also issued fresh rules on Centralised or Shared Services Arrangements (CSSAs) between PFOs and their parent or related companies. The circular allows LPFOs to share services such as human resources, information technology, marketing, legal advisory, and facilities management with their group entities. However, such arrangements must be transparent, conducted at arm’s length, and priced competitively. PenCom emphasised that shared services should not compromise the independence of pension firms or create risks that may affect contributors’ funds.
Meanwhile, the Commission has also inaugurated the Pension Industry Leadership Council in Abuja. The council, according to the Director-General of PenCom, Ms Omolola Oloworaran, is designed to provide collective leadership for the sector, similar to the Bankers’ Committee in the financial industry. She said the body would help coordinate reforms and deepen trust in Nigeria’s pension system.
On the N758bn pension bond earlier approved by the Federal Government, PenCom confirmed that the process of issuance has started. The bond was designed to clear outstanding pension liabilities and bring relief to retirees who have waited for years.
The Director of Contribution and Bond Redemption at PenCom, Usman Musa, told journalists that the bond issuance had advanced quickly after approval by the Federal Executive Council and the National Assembly. “We are hopeful that by the end of this month, or at least the first week of October, we will start receiving the process. And once that is done, the bond is ready to go; we will commence payment,” Musa said.
The N758bn intervention is expected to settle shortfalls in the pensions of university professors, ensuring that they receive their full salaries as retirement benefits. It will also fund the Pension Protection Fund, a statutory scheme created in 2014 to support low-income retirees but left unfunded since inception. In addition, the bond will clear pension increases dating back to 2007.
The latest guidelines and reforms underline PenCom’s efforts to safeguard Nigeria’s N17 trillion pension industry from governance risks and ensure that the interests of contributors remain protected.
