The National Pension Commission (PenCom) has introduced fresh regulatory guidelines that categorically prohibit significant cross-shareholding in multiple licensed Pension Fund Operators (PFOs).
The majority shareholding in multiple PFOs landmark policy, which took effect immediately after its release on Friday, is designed to strengthen governance in Nigeria’s pension sector, enhance transparency, and safeguard contributors’ retirement savings.
According to the regulator, the measure means that no individual or corporate entity will be allowed to hold five percent or more equity in more than one Pension Fund Operator.
PenCom explained that cross-shareholding, if left unchecked, could undermine competition, create conflicts of interest, and compromise the protection of pension assets.
The guideline on PenCom bans majority shareholding in multiple PFOs further highlighted that the prohibition applies irrespective of how such stakes were acquired.
Whether through mergers and acquisitions, conversion of debt to equity, transmission on death, or any other lawful transfer, the restriction remains in force.
Why PenCom Bans Majority Shareholding in Multiple PFOs
PenCom noted that the decision to outlaw significant cross-shareholding was taken to preserve the integrity of the industry.
By preventing one shareholder from exerting influence across multiple PFOs, the regulator seeks to maintain a level playing field and protect the interests of Retirement Savings Account (RSA) holders.
The Commission clarified that for compliance purposes, it would aggregate the shareholdings of a person with those of their related parties, including spouses, directors, subsidiaries, holding companies, affiliates, and employees.
This holistic approach ensures that individuals or corporations cannot circumvent the rules through indirect ownership structures.
The regulator emphasized that the measure on PenCom bans majority shareholding in multiple PFOs would also address potential risks arising from corporate consolidations outside the pension industry.
For instance, if a merger between two non-pension entities results in one party acquiring stakes in multiple PFOs, such ownership must be divested to remain compliant.
While the new guideline is already active, PenCom has provided a six-month grace period for shareholders who currently hold stakes in multiple PFOs.
Within this transition window, such investors must divest enough shares to comply with the restrictions.
In the event that cross-shareholding arises by operation of law—such as inheritance—after the effective date, the affected person will also be given six months to divest the conflicting stake.
Failure to comply will attract sanctions. PenCom warned that any shares held in violation of the guideline would be declared void.
Such shares would not grant voting rights, dividend entitlements, or participation in the governance of the pension fund operator.
The decision further reaffirms the regulator’s firm stance that PenCom bans majority shareholding in multiple PFOs as part of its broader efforts to deepen reforms and strengthen governance within the pension sector.
To ensure strict compliance, PenCom has empowered itself to impose administrative penalties on defaulters in line with its established framework on sanctions.
Agreements or arrangements that create significant cross-shareholding will be nullified, and PFOs will be prohibited from recognizing such shares.
The Commission explained that the enforcement of PenCom bans majority shareholding in multiple PFOs is consistent with international best practices in pension regulation, where strict ownership rules are enforced to protect contributors’ funds from undue influence or mismanagement.
In addition to the restriction on cross-shareholding, PenCom issued a separate circular approving Centralised or Shared Services Arrangements (CSSAs) between PFOs and their parent companies, group entities, or subsidiaries.
The CSSAs allow operators to share resources in areas such as human resources, ICT services, marketing, communications, and legal advisory functions.
However, such arrangements must be carried out at arm’s length, with transparent pricing and without undermining the operational independence of the PFOs.
The Commission underscored that these governance frameworks are intended to foster efficiency, reduce operational risks, and ensure that pension assets remain adequately protected.
As part of the broader reforms, PenCom also inaugurated the Pension Industry Leadership Council, which is expected to serve a coordinating role similar to the Bankers’ Committee in the financial sector.
The council is tasked with driving collaboration among industry stakeholders and deepening reforms across the pension ecosystem.
Speaking at the inauguration in Abuja, PenCom’s Director-General, Ms. Omolola Oloworaran, stressed that collective leadership was necessary to consolidate gains in the sector.
In a related development, PenCom confirmed progress on the N758bn pension bond earlier approved by the Federal Government to clear outstanding pension liabilities.
The bond will address arrears owed to university professors and other pensioners, while also funding the Pension Protection Fund, which has been dormant since 2014.
According to PenCom’s officials, the process of issuing the bond has commenced, with expectations that payments could begin before the end of October.
The intervention is seen as a major relief for pensioners who have endured delays in accessing their entitlements.
With the enforcement of the rule that PenCom bans majority shareholding in multiple PFOs, Nigeria’s pension regulator has signaled its determination to protect contributors’ retirement savings and ensure that governance within the industry remains robust.
By eliminating the risks associated with cross-shareholding and strengthening oversight, PenCom aims to build a more transparent, resilient, and trustworthy pension sector capable of delivering long-term financial security for millions of Nigerians.
