KEY POINTS
- The National Pension Commission (PenCom) has issued a revised regulation requiring Pension Fund Administrators (PFAs) to treat voting rights as a fiduciary responsibility rather than a passive formality.
- Under the new framework, PFAs must now provide an annual disclosure to contributors and the Commission summarizing significant votes, corporate engagements, and governance outcomes.
- The reforms include updated directives for securities lending, repurchase transactions (Repos), and foreign currency contributions to enhance fund transparency and valuation accuracy.
MAIN STORY
PenCom has officially introduced a landmark regulatory shift aimed at transforming how pension assets influence corporate Nigeria. The recently issued 2025 Revised Regulation on Investment of Pension Fund Assets moves beyond traditional oversight to mandate that PFAs act as deliberate stewards of the companies in which they invest. By requiring PFAs to instruct custodians to exercise voting rights in the best long-term interest of contributors, the Commission is reinforcing the link between corporate governance and retirement security.
This new era of transparency is anchored by the requirement for every PFA to maintain a Board-approved Voting and Engagement Policy. These policies must explicitly detail how the PFA handles escalation procedures for corporate engagement and manages potential conflicts of interest. Furthermore, the regulation stipulates that voting actions must be documented and retained for regulatory verification, ensuring that the “rationale for significant votes” is available upon request by the Commission.
WHAT’S BEING SAID
- “PFAs must now disclose annually to contributors a summary of significant votes and engagements… ensuring contributors understand how their assets influence corporate decisions,” noted governance experts following the PenCom announcement.
- PenCom Director General Omolola Oloworaran emphasized the “fiduciary responsibility of investment committees to think independently and act transparently” in the current economic landscape.
- Analysts suggest these reforms make pension fund investors “more deliberate and active stewards” of Nigeria’s wealth, aligning the industry with global best practices.
WHAT’S NEXT
- PFAs are expected to begin preparing their first comprehensive annual reports under the new disclosure rules later this year.
- By November 2025, any entity lacking a valid Pension Clearance Certificate (PCC) will be barred from the ecosystem, marking a strict new era of compliance.
- Observers will be monitoring whether listed companies respond to this increased pressure by strengthening their own internal board structures and governance practices.
BOTTOM LINE
The Bottom Line is that PenCom’s new disclosure rules represent a fundamental shift from passive asset management to active institutional ownership. By mandating annual reports on voting and engagement, the Commission is ensuring that the N21 trillion pension industry uses its weight to drive corporate accountability and sustainable returns for millions of Nigerian workers.
