PenCom Introduces New Regulations to Expand Pension Fund Administrators' Branch Offices and Service Centres

PenCom Introduces New Regulations to Expand Pension Fund Administrators' Branch Offices and Service Centres

In a strategic move to enhance pension services' accessibility and efficiency, the National Pension Commission (PenCom) has issued a new circular outlining the operational requirements for licensed Pension Fund Administrators (PFAs) in relation to their branch offices and service centres. The circular addresses the need for wider pension service coverage across Nigeria.

Amplifying Presence and Streamlining Services

Acknowledging the increasing demand for pension services from the public, PenCom recognizes the necessity for PFAs to have a more comprehensive national presence. Simultaneously, the commission is focused on ensuring streamlined and effective service delivery to Retirement Savings Account (RSA) holders. To attain these goals, the recent circular outlines the minimum prerequisites for operating branch offices and service centres, effectively filling gaps left by earlier regulations.

Circular Objectives

The central objectives of this circular are dual fold:

1. Establish a stronger nationwide presence for PFAs to meet the expanding public demand for pension services.
2. Enhance the efficiency of services provided by PFAs to RSA holders.

Legal Framework and Fundamental Guidelines

The circular is grounded in the provisions of Section 72 of the Pension Reform Act (PRA) 2014, granting PFAs the authority to open or close branch offices within and outside Nigeria, subject to PenCom's approval.

Key guidelines concerning the establishment of branch offices and service centres include:

• PFAs are mandated to open a branch office in any state where they manage up to 10,000 funded RSAs.
• In addition to the above, PFAs are required to open a service centre in the same state for every additional 10,000 funded RSAs.
• PFAs should establish a service centre in states with up to 2,000 funded RSAs.
• PFAs managing pension funds for state government employees or other pension schemes must open a branch office in the state capital when the state begins funding the scheme.
• Irrespective of the above criteria, each PFA is expected to have branch offices in at least two states in each geopolitical zone of Nigeria.

Minimum Structure and Staffing Requirements

Branch offices are designed to provide operational and business services to clients. These services encompass pension administration, benefits administration, customer support, business development, and marketing.

A branch office must have a minimum of six staff, including a branch head and other employees responsible for various operational and business services.

In contrast, service centres focus on operational and business services as well. They should have at least three staff, with one being a university or polytechnic graduate with at least three years' experience in the pension industry.

Infrastructure and Approval Procedures

Both branch offices and service centres should be situated in secure, easily accessible environments. They need to be equipped with adequate facilities and equipment, such as suitable office space, furniture, ICT infrastructure, power sources, and safety equipment.

Establishing a branch office or service centre involves notifying PenCom, securing an Approval-in-Principle (AIP) post-review, undergoing physical inspection, and receiving final approval from the commission. PFAs are required to update their public materials upon receiving approval.

Upgrade, Downgrade, Closure, and Penalties

PFAs have the flexibility to upgrade a service centre to a branch office or downgrade a branch office to a service centre under specific conditions. The application for such changes must include relevant justifications and resolutions from the board of directors.

Failure to comply with the circular's provisions could lead to administrative penalties of no less than ₦2 million.

Effective Date and Transition Period

The circular supersedes all prior circulars and addenda related to branch offices' and service centres’ opening. PFAs have a 12-month transition period following the circular's issuance to allocate necessary resources to their branch offices and service centres, ensuring effective implementation.

PenCom's latest move is strategically aligned with evolving public needs, ensuring broader access to pension services while promoting efficiency in serving all RSA holders.