How to Apply for 2023 Pension Clearance Certificate

The National Pension Commission (PenCom) issued Pension Clearance Certificates (PCCs) to 26,556 organisations that applied and were confirmed to have complied with the Contributory Pension Scheme (CPS) in 2022. Analysis showed 715 more organisations got the PCCs in 2022 than the 25,841 organisations that obtained the certificate in 2021. 

However, it is imperative to note that PCCs expire on the last day of the year, irrespective of the date they were issued within the year. Consequently, all 26,556 PCCs given in 2022 have expired, and the organisations must apply and obtain fresh PCCs for the year 2023. 

PenCom commenced the issuance of PCC to organisations in 2012 in line with the Pension Reform Act, 2014 (PRA, 2014), which mandates all organisations with at least three employees to participate in the CPS. The PCC is evidence of compliance with the PRA 2014 and a prerequisite for all suppliers, contractors, or consultants, soliciting any contract or business from Ministries, Departments, and Agencies (MDAs) of the Federal Government. Accordingly, PenCom issues PCCs to organisations that apply and have fully complied with the requirements.

To qualify for PCC, employers must ensure their employees’ open Retirement Savings Accounts (RSAs) with any Pension Fund Administrator (PFA) of the employees’ choice. Employers must also remit employer and employee monthly pension contributions to the appropriate Pension Fund Custodians (PFCs) no later than seven working days from the payment date of salaries. Furthermore, employers with pension schemes before the CPS must transfer Pension Funds and Assets in their custody to licensed pension operators. Finally, employers must provide their staff with Group Life Insurance Policy (GLI).

The Public Procurement Act requires the PCC to be submitted as evidence of compliance with the PRA 2014 by all suppliers, contractors or consultants soliciting any contract or business from Federal Government Ministries, Departments and Agencies (MDAs). However, it should be noted that under the PRA 2014, compliance is not mandatory for organisations that employ less than three persons. Still, their employees may do so voluntarily through the Micro Pension Plan. Therefore, PCCs are not issued to such organisations by PenCom. 

Requirements for the PCC

An organisation can obtain the PCC by applying to PenCom and attaching the following: Certified list of employees of the organisation as of the end of the last fiscal year; Certified rates of monthly contributions indicating the employer portion (minimum of 10 percent) and employee portion (minimum 8 percent) and evidence of remittance of pension contributions for the last three fiscal years or from the date of incorporation/registration/licensing to the previous fiscal year of operation. In addition, the organisation must also attach evidence of transfer of pension funds and assets for any pre-2004 retirement benefits scheme into the employees’ RSA (where applicable); proof of remittance of all outstanding pension contributions and penalties (where applicable); and evidence of a valid Group Life Insurance Policy, which should include a Certificate of Group Life Insurance, Policy Document and proof of payment for the policy.

Issues to note in the Application for PCC 

The processing of PCC applications as designed by PenCom is straightforward and transparent. The applications are processed within the advertised time frame of 15 working days, provided that all requirements are met. However, many applicants fail to provide the required documents and often submit their applications without regard to the timeline for processing. It is important to emphasise that the PCC is issued to the applicant organisation at no cost. The PCC is useable all year round, but its validity cannot extend beyond 31 December of the year it was obtained. Furthermore, in a general notice to all employers published in September 2017, PenCom warned employers against using third parties to get the PCC, as employers are encouraged to apply directly to avoid any hitches.

Some of the noted deficiencies in the submissions by organisations include the following: Under remittance of contributions; Non-provision of Group Life Insurance for at least three times the total annual emolument of employees; understating the number of employees and remittance of outstanding pension contributions, as established by the Recovery Agents. In the event of any deficiency, a notification is forwarded to the applicant for remedial action before the issuance of the PCC. However, the PCC will not be issued if the applicant fails to provide the requested documents. 

Furthermore, a list of organisations that were issued the PCC is uploaded on the PenCom website to facilitate verification by interested parties. Consequently, any certificate not found on the website is invalid, as the list is updated daily. There is also an interface through which the Bureau of Public Procurement (BPP) verifies the PCCs of organisations as PenCom feeds BPP the information daily. 

In conclusion, the 26,556 organisations that were issued PCCs in 2022 remitted about N115.71 billion for their 378,096 employees. Since the introduction of PCCs in 2012, PenCom has observed substantial compliance with the CPS by the private sector. PenCom hereby, reiterates its commitment to the effective regulation and supervision of the pension industry in Nigeria.