PenCom begins new Code of Corporate Governance

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By Our Reporter

There is a new dawn at the National Commission (PenCom). The body has replaced the Code of Corporate Governance for Licensed Operators 2008 with a new code, the Code of Corporate Governance 2018.

The code, which became effective from January 2, followed the issuance of the Nigerian Code of Corporate Governance 2018 by the Financial Reporting Council (FRC) of Nigeria.

The commission said it developed a specific draft Corporate Governance Guidelines for Pension Fund Operators (PFOs), which is consistent with the Pension Reform Act (PRA) 2014, rules, regulations and guidelines of the Commission.

In a circular dated December 20, last year with reference number PENCOM/INSP/SURV/2019/1355, signed by Head, Surveillance Department, Ehememe Ohioma, the Commission said it aims at encouraging PFOs to embrace good corporate governance practices and ethics.

Ohioma added that the circular would provide measures that would strengthen corporate governance practices as well as assist PFOs in meeting their responsibilities and ensuring greater accountability.

He noted that stakeholders in the industry have a responsibility to actualise the main objective of the Pension Reform Act 2014, which is to ensure that every worker receives his or her retirement benefits promptly.

He said: “Essentially, the circular was developed to institutionalise corporate governance best practices in PFOs in Nigeria; promotes awareness of essential corporate values and ethical practices in the industry; To show a clear delineation of roles, authority and responsibilities among the shareholders, board and Management of the PFOs; and To better align the interest of the board and management, with those of the shareholders and other stakeholders, especially the contributing members (RSA holders).’’

“The circular consists of six broad areas namely board of directors, control functions, relationship with shareholders, ethics and business practice, sustainability and transparency’

“The Board of the PFOs shall be responsible for monitoring adherence to ensure that breaches are effectively sanctioned. This may be delegated to the committee responsible for nomination and governance. Directors, top management and other employees shall have an obligation, at all times, to comply with the provisions of the Circular on Corporate Governance for Licensed Pension Operators in Nigeria.

“Non-compliance with the provisions of this circular will attract appropriate administrative penalty by the Commission.”

Before now, many operators have been found contravening the Code of Corporate Governance 2008 and were sanctioned by Pencom.

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The commission has in its Quarterly Summary accused Pension Fund Administrators (PFAs) of not crediting pension contributions into Retirement Savings Account (RSAs).

PenCom stated that other major issues observed from the review of Compliance Reports forwarded by the operators during the period were the failure of PFAs to fill vacant top management positions and delays in the payment of retirement benefits to retirees.

It added that it has forwarded letters to the operators involved on the issues and have been reviewing responses to resolve them.

On Corporate Governance, the commission noted that the routine examination on some PFAs revealed issues on operational activities.

“The 2015 Routine Examination on one of the operators revealed issues bordering on Corporate Governance in its operational activities.

“Consequently, the commission placed monetary sanction on the operator for violation of its licensing conditions; issued caution letter to the managing director to desist from any act capable of undermining the independence of the compliance officer and internal auditor; and issued warning letter to two of its directors for not upholding sound corporate governance, which requires high ethical conduct at all times,” PenCom added.