PenCom enforces dollar pension reporting rules for PFAs and custodians, mandating 24-hour reports for contributions above $10,000 to the NFIU

The National Pension Commission (PenCom) has issued a fresh directive requiring Pension Fund Administrators (PFAs) and Custodians to report all foreign currency contributions exceeding $10,000 to the Nigeria Financial Intelligence Unit (NFIU) within 24 hours of receipt.

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Released on Tuesday via PenCom’s official website, the guidelines mark a major step towards aligning Nigeria’s pension industry with global compliance standards.

It also aims to tighten oversight on dollar inflows, reinforcing controls against money laundering and terrorism financing.

PFAs and custodians must now comply with Section 3(1) of the Money Laundering (Prevention and Prohibition) Act 2022, which mandates full disclosure of transactions over $10,000.

This includes the sender’s full name, address, purpose, and amount of the transfer.

PenCom also instructed that suspicious contributions below $10,000 should be flagged in line with the Financial Intelligence Unit Act 2018.

“In line with Section 3(1) of the Money Laundering Act, PFAs and custodians shall ensure that all foreign currency contributions exceeding $10,000 are reported to the Nigeria Financial Intelligence Unit within 24 hours,” the Commission stated.

The broader framework makes foreign currency pension contributions available to a diverse group of participants, including Nigerians working abroad, foreign nationals employed by international organisations in Nigeria, and locals earning in foreign currency.

To participate, contributors must provide valid documentation such as a National Identification Number, an international passport, and next-of-kin information.

Foreign workers in Nigeria will be required to submit extra documentation, while all participants must undergo strict Know Your Customer (KYC) checks.

Contributions are to be made exclusively in US dollars, regardless of the contributor’s base currency.

Nigerians abroad must use Non-Resident Nigerian Ordinary Accounts, while locals are required to contribute via domiciliary accounts tied to their custodial banks.

The guidelines introduce robust fund management rules. Contributors must split their savings: 60 per cent may be accessed under certain pre-retirement conditions, while 40 per cent is preserved until retirement.

Withdrawals are restricted to twice a year, and only after funds have been in the Retirement Savings Account for at least six months.

Uncredited contributions must be returned to the sender within 48 hours, and custodians must notify PFAs of incoming funds within 24 hours—who in turn must inform contributors within the same period.

All dollar contributions will be pooled into a dedicated Dollar Fund and invested in dollar-denominated instruments such as Eurobonds, supranational bonds, and government-backed securities.

Naira-denominated investments are permitted but must be hedged against currency risks using instruments approved by the Central Bank of Nigeria.

To minimise exposure, PenCom set strict investment caps.

For example, no more than five per cent of the Dollar Fund may be placed in AAA-rated corporate bonds, while investments in BBB-rated assets are limited to one per cent.

Contributions and investment returns are tax-free if held for five years or longer. Early withdrawals will incur tax penalties, to be remitted by custodians within 21 days.

PFAs must also submit daily and monthly reports to PenCom, outlining contributions, withdrawals, and portfolio valuations in both dollars and naira.

The NFIU will play a critical role in monitoring compliance and ensuring transparency in the system.

By enforcing the $10,000 threshold, PenCom is aiming to insulate pensions from exchange rate shocks, boost investor confidence, and expand Nigeria’s pool of investable dollar assets.

“For Nigerians abroad and residents earning in dollars, the new policy provides a structured way to save for retirement in hard currency,” PenCom noted.

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“It’s not only about broadening participation in the CPS but also about ensuring integrity, transparency, and security of pension contributions in foreign currency.”