PenCom Issues New Pension Fund Reporting Rules

The National Pension Commission (PenCom) has introduced new guidelines to standardise the methodology for calculating and reporting investment performance across pension portfolios, in a move aimed at improving transparency and discouraging short-term decision-making.
The circular, signed by A.M. Saleem, Head of Surveillance Department, was issued to all Licensed Pension Fund Operators (PFOs).
Under the new framework, Pension Fund Administrators (PFAs) must calculate returns over a rolling 36-month period and convert them into an equivalent annual rate, expressed to four decimal places. For unitised funds, this involves computing the nth root of the ratio between the accounting unit’s end and starting value. For non-unitised funds such as Approved Existing Schemes (AES), Closed Pension Fund Administrators (CPFAs), and Additional Benefit Schemes (ABS), the Time-Weighted Return (TWR) method must be applied.
PenCom said the computations must be done monthly, using audited and approved opening values to ensure integrity. “This circular is intended to ensure transparency and encourage sustainable, long-term investment strategies by minimising short-term decision-making,” the Commission stated.
In a major shift, PFAs are also mandated to publish the Sharpe Ratio for each fund, using the three-year average yield of the 10-year Federal Government of Nigeria bond as the risk-free benchmark.The ratio must be calculated alongside each fund’s standard deviation.
Monthly performance reports are to be published on each operator’s website no later than the 10th day of every month.
The directive supersedes Sections 6.0 to 6.4 of the existing Regulation on Valuation of Pension Fund Assets, with all inquiries directed to the head of investment supervision.
Last week, the CEO of the Pension Fund Operators Association of Nigeria (PenOp), Oguche Agudah, disclosed that PenCom had recovered N4.57 billion from defaulting employers between the first quarter of 2024 and the first quarter of 2025.
The recoveries included N2.12 billion in outstanding pension contributions and N2.45 billion in penalties imposed on 138 employers who failed to remit as required by law.
Agudah reminded employers of their obligations, stressing that any organization with three or more employees is legally required to remit pension contributions.