GUIDELINES FOR RISK MANAGEMENT FRAMEWORK FOR LICENSED PENSION OPERATORS
Framework · Finance
Guidelines require licensed pension operators to implement a risk management framework for identifying, assessing, and mitigating risks to pension funds. They target pension fund administrators, custodians, and their oversight bodies. This protects contributors' assets and ensures financial stability.
GUIDELINES FOR RISK MANAGEMENT FRAMEWORK FOR LICENSED PENSION OPERATORS
What Is This Policy?
PenCom guidelines requiring all licensed Pension Fund Administrators and Pension Fund Custodians to implement a formal enterprise risk management framework to identify, assess, mitigate, and monitor risks to pension fund assets and operations.
Who Does It Target?
PFAs and PFCs and their risk management departments PenCom supervision and examination officers External auditors and risk consultants serving pension operators
What Does It Aim to Achieve?
Ensure licensed pension operators have robust risk management practices that protect contributors' assets, support financial soundness, and prevent operational failures.
Key Features
Risk Identification: Requires operators to systematically identify all material risks including investment, operational, liquidity, and reputational risks. Risk Assessment: Operators must assess identified risks by likelihood and impact and maintain a risk register. Risk Mitigation: Operators must develop and implement controls to mitigate material risks. Board Oversight: The board of each operator is responsible for approving and overseeing the risk management framework.
Current Status
Rollout Stage: Active Coverage: All PenCom-licensed operators Beneficiaries: Pension contributors; pension system stability Funding: Operator compliance costs
How to Access
Operators must submit their risk management framework to PenCom for review Annual risk reports must be filed with PenCom PenCom examiners assess risk management practices during on-site examinations Application method: Submit risk management framework documents to PenCom.
Important Terms
Inadequate risk management is a licence condition violation Material risk events must be reported to PenCom within 24 hours Board approval of the risk framework must be documented in board minutes
Official Resources
Website: https://www.pencom.gov.ng Contact: National Pension Commission (PenCom)
Legal Framework
Issued under the regulatory powers of the National Pension Commission (PenCom) pursuant to the Pension Reform Act 2014. Draws on the CBN risk management framework, the Banks and Other Financial Institutions Act (BOFIA) 2020 risk standards, the Companies and Allied Matters Act (CAMA) 2020 on directors duties, and the Code of Corporate Governance for Licensed Pension Operators. Aligns with IOPS Principles for Private Pension Supervision on risk management.