{"id":631483,"date":"2026-09-21T14:42:22","date_gmt":"2026-09-21T14:42:22","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/631483\/"},"modified":"2026-09-21T14:42:22","modified_gmt":"2026-09-21T14:42:22","slug":"pencom-tightens-rules-on-pension-asset-transfers-among-pfas","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/631483\/","title":{"rendered":"PenCom tightens rules on pension asset transfers among PFAs"},"content":{"rendered":"


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\u2026. demands prior approval\n<\/p>\n

The National Pension Commission (PenCom) has tightened oversight of asset transfers between pension funds, requiring Pension Fund Administrators (PFAs) to demonstrate the commercial and fiduciary justification for such transactions before execution.\n<\/p>\n

Under a circular earlier issued in July 11, 2024, the commission re-issuing it now says, PenCom had observed instances of pension assets being crossed between funds without prior impact analysis to ensure fairness, transparency and compliance with existing laws.\n<\/p>\n

The directive, referenced PenCom\/INSP\/Survw\/2024\/1382 and addressed to all licensed pension fund operators, introduces guidance for asset transfers between funds, excluding interfund transfers involving Retirement Savings Account (RSA) funds.\n<\/p>\n

The commission\u2019s framework places the responsibility for demonstrating the suitability and purpose of asset crossings on PFAs.<\/p>\n

Before transferring an asset, the administrator must conduct comprehensive due diligence to establish that the receiving fund has the appropriate risk appetite and holding capacity. The asset must also align with the fund\u2019s investment strategy and applicable regulatory requirements.\n<\/p>\n

PenCom further requires PFAs to present a compelling justification showing that the proposed transfer is in the best interest of the receiving fund. The originating fund must equally have a documented rationale for divesting the asset, supported by reviews from relevant control departments.\n<\/p>\n

The requirements could increase the scrutiny surrounding transactions that move investments between pension funds, particularly where the rationale for the transfer, valuation or investment suitability is not adequately documented.\n<\/p>\n

A key provision of the circular is the requirement for a liquidity premium where an illiquid asset is involved in a crossing arrangement.<\/p>\n

According to PenCom, the compensation is intended to address the reduced liquidity and potential risks associated with holding illiquid assets, while ensuring equitable treatment of the receiving fund.<\/p>\n

Read also:\u00a0PenCom extends civil servants\u2019 pension verification deadline to December<\/a> <\/p>\n

The premium is to be computed with consideration for the issue size and term to maturity of the instruments.\n<\/p>\n

The provision introduces an additional pricing consideration for pension fund operators handling transfers involving assets that cannot be readily converted into cash\n<\/p>\n

The circular also assigns specific responsibilities to the boards of directors of PFAs.\n<\/p>\n

Boards are required to formulate asset transfer policies consistent with existing laws, regulations and the internal policies of their organisations. They must assess management submissions, examine the potential impact of proposed transfers and ensure that the transactions align with the fiduciary responsibilities and strategic objectives of the fund.<\/p>\n

PenCom specifically directs that asset crossing requests must not be intended for returns management, but should be consistent with the fund\u2019s fiduciary responsibilities and strategic objectives.\n<\/p>\n

For non-discretionary funds or schemes, the PFA must obtain explicit approval from the sponsor of the receiving fund.\n<\/p>\n

Most significantly, PFAs are required to seek and obtain a \u201cno objection\u201d from the commission before executing an asset transfer.\n<\/p>\n

The new framework extends oversight to pension fund custodians.\n<\/p>\n

Custodians are required to ensure that only transfers with prior PenCom \u201cno objection\u201d are executed. They must also promptly report suspicious transactions that could indicate churning or excessive trading designed to circumvent regulations or generate commissions at the expense of pension fund interests.<\/p>\n

In addition, custodians must submit comprehensive monthly reports detailing asset crossings to the commission.\n<\/p>\n

PenCom, on its part, is required to review a PFA\u2019s request and issue a \u201cno objection\u201d decision or otherwise within two working days of receiving the request. The commission will also continuously monitor compliance with the circular and issue corrective directives where necessary.<\/p>\n


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Modestus Anaesoronye<\/a> <\/p>\n

Modestus Anaesoronye is a leading Nigerian financial journalist with over two decades of experience reporting on the insurance and pension sectors across Nigeria and West Africa. He has held key editorial positions at major national media outlets, including The Comet, The Nation, and Financial Standard, and currently serves as a Senior Financial Analyst at BusinessDay Media Ltd.
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\nA widely travelled reporter, he has covered industry developments in more than 14 countries across Africa and Asia.
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\nAnaesoronye is a multiple award-winning journalist, honoured several times as Insurance Journalist of the Year and Pension Journalist of the Year by recognised industry bodies, including PensionScope and the Pension Fund Operators Association of Nigeria (PenOp), among others. <\/p>\n

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