Getting a PenCom Pension Clearance Certificate
What a Nigerian employer must show PenCom for a Pension Clearance Certificate, from contribution rates and remittance evidence to group life cover.
By Achekam · · 4 min read · For Running a business businesses in Nigeria
The tender closes on Friday, and the checklist asks for a Pension Clearance Certificate. If your pension remittances have been regular and well documented, getting one is a matter of assembling a file. If they have not, no amount of hurrying will produce it by Friday, because the certificate looks backwards over years, not weeks.
This article sets out what PenCom's published requirements ask an employer to show, where the evidence comes from in your own records, and how Achekam's payroll helps you build the trail that makes the application straightforward.
A note on the source
PenCom's requirements for issuing a Pension Clearance Certificate are set out in a document on its website, uploaded in April 2017 according to its address. Requirements can change, and the application arrangements may have changed since. Read the PenCom requirements document, which lists what an employer must submit, and then confirm the current position with PenCom before you apply.
The contribution rates you certify
PenCom requires an employer applying for a Pension Clearance Certificate to certify its monthly pension contribution rates. The rates must be a minimum of 10% of monthly emoluments by the employer and a minimum of 8% by the employee.
This is the first test, and it is simple to check. Look at the rates your payroll actually applies. If either is below the minimum, the problem is not the application; it is the payroll, and it needs fixing first, with advice on the months already paid at the lower rate.
The list of employees
The application must include a list of the organisation's employees as at the end of the last fiscal year, which must be certified with the organisation's authorised official stamp.
Use your payroll records as at that date, not today's staff list. People who left after the year end belong on it; people who joined since do not. Have someone other than the preparer check it against the payroll for the last month of the year before it is stamped.
Three years of remittances, and no arrears
The heaviest part of the file is evidence of payment. PenCom requires evidence that monthly pension contributions for all employees were remitted for the last 3 fiscal years. An organisation that has not existed for 3 years shows evidence from the date of its incorporation, registration or licensing.
PenCom also requires evidence that all outstanding pension contributions and penalties have been remitted. A business with a gap in one month two years ago, or a penalty it never paid, will need to settle and document it before the certificate is issued.
The words that matter are "monthly" and "all employees". The evidence has to show each month, for every employee, not a total for the year. That is why remittance schedules per pension fund administrator, kept month by month, are so valuable.
Group life insurance in force
PenCom requires an applicant to show a current group life insurance policy for its staff, stating the number of employees covered and the sum assured.
Two things to check before applying: that the policy is current on the day you apply, not lapsed last month, and that the number of employees covered matches your staff numbers. A policy covering fewer people than you employ invites questions.
Where Achekam's payroll fits
Achekam does not apply for the certificate, file pension returns or pay pension fund administrators. What it gives you is the monthly evidence in an orderly form.
Pension schedules per PFA. From each approved pay run, Achekam prepares the Nigerian monthly schedules, including pension per pension fund administrator. Each schedule comes from a run that someone approved, so the figures for any month can be traced to the payroll that produced them.
The payment schedule. Each approved run has a payment schedule downloadable as CSV. Marking it paid only records the fact; Achekam moves no money.
Recording each remittance. Achekam does not file or pay Nigerian payroll returns. A person pays each PFA and records the filing with the reference it gave, and a second person confirms each payment. A schedule is finalised by someone other than the person who prepared it.
Kept up every month, those records give you a run of pension schedules and confirmed remittances, month by month, administrator by administrator, which is the backbone of the three-year evidence PenCom asks for.
Building the file
| PenCom asks for | Where it comes from |
|---|---|
| Contribution rates you certify | Your payroll's pension settings, checked against the minimums |
| List of employees at the last year end | Payroll records at that date, stamped |
| Three years of monthly remittances | Monthly pension schedules per PFA, with recorded and confirmed payments |
| No outstanding contributions or penalties | The same records, plus evidence of any arrears settled |
| Current group life policy | Your insurer |
Applying on PenCom's portal
PenCom's document says applications are made and submitted on the e-PensionClearance Certificate Application Portal on its website, www.pencom.gov.ng. Since that arrangement may have changed, check the current route on PenCom's site.
Before you start, gather the file above in one folder, so the application can be completed in one sitting. Note the date of submission and any reference the portal gives you.
How pension is paid to each administrator month by month is explained in paying pension to each PFA. Tenders often ask for a tax clearance certificate in the same breath; see the Nigerian tax clearance certificate. Start the file now, while next year's tender is still a year away.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
