NATIONAL PENSION COMMISSION CODE OF CONDUCT FOR RATING AGENCIES
Code · Finance
A Code governs the conduct, independence, and methodology of credit rating agencies for pension fund investments. It targets credit rating agencies, PFAs, and issuers to prevent conflicts of interest. This ensures accurate ratings and protects pension contributors.
NATIONAL PENSION COMMISSION CODE OF CONDUCT FOR RATING AGENCIES
What Is This Policy?
PenCom's code governing the conduct, independence, and methodology of credit rating agencies engaged to rate instruments in which pension funds are invested.
Who Does It Target?
Credit rating agencies rating pension-investable instruments PFAs relying on credit ratings for investment decisions Issuers of instruments to pension funds PenCom oversight officials
What Does It Aim to Achieve?
Ensure the integrity, independence, and accuracy of credit ratings used by pension fund managers, protecting pension contributors from investments in improperly rated instruments.
Key Features
Independence Requirements: Rating agencies must be independent from issuers and PFAs to avoid conflicts of interest. Methodology Disclosure: Rating agencies must publish their rating methodologies and any assumptions underlying credit ratings. Timeliness: Ratings must be reviewed and updated promptly when material information changes. Prohibited Conduct: Prohibits fee arrangements that create incentives for inflated ratings.
Current Status
Rollout Stage: Active Coverage: Rating agencies serving the pension industry Beneficiaries: Pension contributors; integrity of capital markets Funding: Rating agency fees; market-based
How to Access
Rating agencies must register with PenCom and comply with the Code PFAs must use only PenCom-approved rating agencies for pension fund investment decisions Application method: Rating agencies register with PenCom; PFAs engage approved agencies.
Important Terms
Issuer-paid ratings must include additional disclosure to manage conflicts Ratings may not be used selectively or out of context Non-compliant rating agencies may be debarred from the pension industry
Official Resources
Website: https://www.pencom.gov.ng Contact: National Pension Commission (PenCom)
Legal Framework
Issued under the Pension Reform Act 2014, which established the National Pension Commission (PenCom) and the Contributory Pension Scheme. Derives authority from PenCom's regulatory mandate under the Pension Reform Act and operates alongside the Investment Regulations for Pension Fund Administrators and the Guidelines for Pension Fund Operators.