The National Pension Commission (PenCom) has asked Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) to report all foreign currency pension contributions above $10,000 to the Nigeria Financial Intelligence Unit (NFIU) within 24 hours of receipt.
The directive is contained in the ‘Guidelines on Foreign Currency Pension Contributions’ released early this week.
“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 report must indicate the nature and amount of the transfer, the name and address of the sender, and any other information required by the NFIU,” PenCom stated.
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According to the commission, the framework is designed to open the Contributory Pension Scheme (CPS) to Nigerians in the diaspora and residents earning in foreign currency.
It will also help the commission tighten its regulatory controls to prevent abuse of the system.
It urged the PFAs and PFCs to comply with Section 3(1) of the Money Laundering (Prevention and Prohibition) Act 2022.
It stressed that this provision makes it mandatory to report all transactions above the $10,000 threshold, providing details such as the sender’s name, address, transfer amount, and purpose.
The pension fund regulator also stated that suspicious contributions below $10,000 are to be flagged in line with the Financial Intelligence Unit Act 2018.
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The move is to align Nigeria’s pension framework with international compliance standards while safeguarding against money laundering and terrorism financing.
It said the guidelines make provision for a wide category of contributors, including Nigerians living and working abroad, Nigerians and foreigners employed in Nigeria by foreign companies or international organisations who are paid partly or wholly in foreign currency.
This is to ensure that diaspora workers and expatriates can channel their retirement savings directly into the CPS, without being constrained by naira-only contributions, PenCom explained.
Among other know-your-customer (KYC) checks, contributions are strictly to be made in United States dollars, even where earnings are in another foreign currency.
The guidelines also state that Nigerians abroad are required to remit funds through Non-Resident Nigerian Ordinary Accounts, while local contributors must use domiciliary accounts linked to custodial banks.
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PenCom noted that contributors must split their savings into two parts: 60 per cent, which can be accessed under limited conditions before retirement, and 40 per cent, which can be preserved until retirement.
It also stated that withdrawals are restricted to twice a year and only after the initial deposit has been in the Retirement Savings Account for at least six months.
Expectedly, PFCs must notify PFAs of contributions within 24 hours, while PFAs must inform contributors within the same period.
Contributions that cannot be credited within 48 hours must be returned to the originating account, it ordered.
Pinnacle Daily reported on Wednesday, September 24, that PenCom’s Director-General, Omolola Oloworaran, described the initiative as part of the ongoing “Pension Revolution 2.0” aimed at raising standards and broadening coverage in the sector.
“This initiative is a bold reform that demonstrates PenCom’s commitment to the retirement security of all working Nigerians, irrespective of geographical borders,” she said.
With improved contribution from diaspora remittances to Nigeria’s foreign exchange reserves in recent times, the PenCom guidelines are expected to boost confidence in the pension system while expanding the pool of investable dollar assets for PFAs.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
