WHISTLE BLOWING GUIDELINES FOR PENSIONS - PenCom
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PenCom WHISTLE BLOWING GUIDELINES FOR PENSIONS RR/P&R/08/014 www.pencom.gov.ng National Pension Commission
June 2008
About this Guideline
The Whistle Blowing Guideline for Pensions is divided
into six (6) sections.
Section one is the introduction, Sections two and three
outline responsibilities for reporting breaches as well
as actions and reactions to breaches.
The severities of breaches are categorized in the fourth
Section, and the procedures for whistle blowing are
spelt out in Section five. Section six addresses
enforcement issues.
The requirements of this Code are consistent with the
Provisions of the Pension Reform Act, 2004 and are
also considered enforceable within the industry.
Review and Enquiries
These Guidelines shall be subject to review by the
Commission from time to time as the need arises.
All enquiries regarding these Guidelines shall be
directed to the Director General, National Pension
National Pension Commission
1June 2008
RR/P&R/08/014
WHISTLE BLOWING GUIDELINES FOR PENSIONS
1.0 Introduction company‟s business, to the
Commission.
1.1 Transparency is one of the core
values of the Commission which 2.1.2 The directors, management,
has been encouraged amongst the employees, and any other person(s)
operators. As a regulatory that have dealings with the
philosophy, the Commission has PFA/PFC shall also have the
adopted a stakeholder approach in responsibility to report breaches to
its regulatory activities. This the Commission.
philosophy has often encouraged
operators to make meaningful 2.1.3 Pursuant to 3.1.2 above, the
contributions that would add value PFA/PFC shall ensure that its
to regulatory initiatives thus members of staff are aware of their
engendering amongst stakeholders, responsibilities with regards to
a sense of responsibility towards whistle blowing and that they are
the industry. conversant with reporting
procedures.
1.2 To further entrench the efforts of
the Commission in this regards, the 2.1.4 The Commission shall seek to
Whistle Blowing Guidelines are protect the identity of a whistle
being issued. The Whistle Blowing blower even in the course of an
Guidelines provide lucid guidance investigation, resulting from the
for reporting breaches in PFAs, report.
PFCs and CPFAs and benchmark
2.1.5 The Commission acknowledges the
examples on reporting. The
potential impact of a report on the
Guidelines also restrict reporting to
relationship between the whistle
significant matters.
blower, if an employee, and his
employer. Consequently, the
PFA/PFC shall undertake that in
2.0 Reporting Breaches the event of its employee blowing
the whistle on its unethical or
2.1 Responsibilities for Reporting illegal operations or activities, such
Breaches employee shall not be victimized in
any way. The undertaking shall be
2.1.1 In line with Section 68 of the
in writing to the Commission and
Pension Reform Act (PRA) 2004,
in the event that such employee is
the Compliance Officer of the
victimized, the Commission shall
PFA/PFC has the statutory
be obliged to employ appropriate
responsibility to report any breach
regulatory tools to offer redress to
of the Pension Reform Act 2004,
the employee concerned.
codes, guidelines, rules and
regulations issued by the
Commission, in the course of the
National Pension Commission
2June 2008
2.1.6 A breach shall be reported if it is rules issued by the
likely to be of material significance Commission.
to the Commission in carrying out
its functions.
3.1.2 In line with the provisions of 3.1.1
2.1.7 What is of material significance to above, the Commission shall not
the Commission shall depend on regard as materially significant, a
the cause of the breach, the breach arising from an isolated
reaction to the breach and the incident, for example, those
wider implications of the breach. resulting from teething problems
with a new system procedure or an
unusual combination of
circumstances.
3.0 Actions and Reactions
3.1.3 A breach shall be of material
3.1 Actions That Causes Breaches
significance to the Commission if it
3.1.1 A breach shall be of material negatively or adversely impacts on
significance to the Commission the functions of the Commission.
where a contributory cause of the
3.1.4 In line with determining the
breach is:
circumstance in 3.1.3 above, the
(a) Dishonesty including fraud, principal statutory objective of the
bribery and other corrupt Commission shall be considered to
practices; be to:
(a) protect the benefits of
(b) misuse/misappropriation of
contributors;
assets or contributions;
(b) ensure effective administration
(c) poor corporate governance; of the pension fund;
(d) inadequate controls resulting (c) reduce the risk of situations
in deficient administration; arising, which may lead to loss
of contributions or inability of
a contributor to obtain pension
(e) failure to pay contributions upon retirement; and
correctly or promptly;
(d) promote good work ethics
(f) inappropriate decision-making amongst operators.
practices; or
3.1.5 Breaches that are likely to impact
(g) acting or failing to act in the on the functions of the Commission
face of a deliberate shall include substantial failures in
contravention of the law, any of the following:
regulations, guidelines and
National Pension Commission
3June 2008
(a) remittance of the right amount (c) fail to notify the RSA holder
of contribution into a whose benefits have been
Retirement Savings Account affected by the breach.
(RSA), and at the right time by
the employer;
3.2.3 The action to be taken by the
(b) legitimate and timely Commission shall depend on the
payments out of the pension nature of the concern. The matters
fund by the PFA; raised may:
(c) investment of pension funds in (a) be investigated internally;
line with the provisions of the
Investment Guidelines, issued (b) be referred to the Police;
by the Commission;
(d) proper administration of the (c) be referred to the Economic
pension fund and maintenance and Financial Crimes
of appropriate records; and Commission (EFCC); or
(e) issuance of accurate, clear and
timely information to RSA (d) form the subject of an
holders. independent inquiry.
3.2 Reaction to Breaches
3.2.4 In order to protect individuals and
3.2.1 The Commission shall not regard a the Commission, initial enquiries
breach as materially significant shall be made to decide whether an
where the PFA/PFC takes prompt investigation is appropriate and, if
and effective action to investigate so, what form it should take.
and correct the breach and its Concerns or allegations, which fall
causes, and where appropriate, to within the scope of specific
notify any RSA holder whose procedures, shall be referred for
benefits have been affected. consideration under those
procedures.
3.2.2 However, the breach shall be
considered to be material where, 3.2.5 Some concerns may be resolved by
after a breach is identified, the agreed action without the need for
PFA/PFC or the service providers investigation.
involved:
3.2.6 The Commission shall take steps to
(a) do not take prompt and minimize any difficulties, which a
effective action to remedy the whistle blower may experience as a
breach and identify and tackle result of raising a concern. For
its cause in order to minimize instance, if required to give
risk of occurrence; evidence in criminal or disciplinary
proceedings, the Commission will
(b) are not pursuing this advise about the procedure.
correction to a proper
conclusion; or
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4June 2008
3.2.7 Where the whistle blower is an and direct the PFA/PFC to
employee of the PFA/PFC the retract whatever actions
following shall apply to protect the taken.
whistle blower:
(a) No PFA/PFC shall dismiss, 4.0 Severity of Breaches
suspend or terminate the
4.1 Categories of Breaches
appointment of a whistle
blower without the prior 4.1.1 A breach shall be considered to be
consent of the Commission. materially significant if it poses a
risk to the scheme such that there
(b) No PFA/PFC shall demote or is likelihood that the scheme will
redeploy a whistle blower not be able to deliver the benefits
without the consent of the promised, in the long run.
Commission.
4.1.2 A situation where other breaches
(c) In case of the 3.2.7(a) and are likely in the future, because the
3.2.7(b), the PFA/PFC shall board and management of a
provide the Commission with PFA/PFC lack the appropriate
solid reasons for its proposed knowledge and understanding to
actions. fulfill their responsibilities, is likely
to give rise to a materially
(d) The PFA/PFC shall not in any significant breach.
way deny a whistle blower
4.1.3 As a form of guidance, the following
his/her entitlements in terms
“traffic light” guidance provide a
of promotions, salary
benchmark against which whistle
increases, trainings and
blowers can judge breaches they
opportunities.
come across in the categories of
Red, Green and Amber:
(e) Any salary review or incentive
that will affect the whistle (a) Red Scenarios involve
blower negatively shall be breaches which are materially
referred to the Commission for significant because they could
approval, before immediately or potentially
implementation. pose significant risk to
contributors‟ interests and
(f) The whistle blower shall have must be reported.
the right to make to the
Commission, any complaint, in (b) Green Scenarios involve
writing against his/her breaches which are not
employer, as he/she may deem materially significant and do
necessary. not have to be reported but
should be recorded. Such
(g) Where the Commission finds breaches do not normally, on
violations against the whistle their own, imply or pose a
blower, by the PFA/PFC it significant immediate or
shall issue a letter of caution
National Pension Commission
5June 2008
potential risk to contributors‟ Guidelines issued by the
interests. Commission.
(c) Amber Scenarios involve (b) Breaches carrying criminal
breaches which are less clear penalty such as trading on the
cut and the context of the assets of the fund in the name
breach must be taken into of the PFA, its shareholders or
account in order to decide directors.
whether it is materially
significant and should be (c) Persistent failure by the
reported. employer to pay contributions
in accordance with the
schedule of contributions and
4.1.4 Red breach situations shall include where they remain unpaid for
but not limited to the following: 7 days after the due date or
where the employer appears to
(a) Matters including possible be using the contributions
fraud/defalcation or instead of remitting them to
misappropriation of assets or the PFC.
contributions such as:
(i) authorization of loans (d) Breaches involving widespread
from the pension fund and/or persistent
managed by the PFA or administrative failures
held in custody by the stemming from poor record
PFC to an associate a keeping or inadequate
related company or controls, for example:
employee or any other
person; (i) widespread and persistent
misallocation of
contributions and/or
(ii) a PFA or PFC receives an voluntary contributions to
instruction to transfer RSAs;
part of the fund,
documents of title or sale
proceeds respectively to a (ii) persistent failure to carry
destination that does not out reconciliation of
appear to be another PFC; contributions received
and is not an authorized resulting in persistent
sale; or discrepancies; and
(iii) a persistent or significant (iii) persistent failure to
departure of the update the records of a
investments carried out by contributor, whose
a PFA from the provisions personal details have
of the Investment changed.
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6June 2008
(e) Inappropriate actions that result in an error or
manipulate or overstate the misunderstanding, for
Funds unit price i.e. through example:
non-creation of units or the (i) inconsequential and
revaluation of assets that corrected omissions from
cannot be revalued e.g. FGN the minutes of board
bonds to market value, or meetings;
deposit for shares revalued to
market value.
(ii) simple breaches of the
4.1.5 Green breach situations shall Investment Guideline
include the following: through dealing or
implementation errors or
(a) Breaches which are isolated or movements in the
arise from, unintended markets, where the
administrative lapses in an breach is remedied within
otherwise well-run system reasonable period of time.
which for example arise due to
systems failure or change in
service provider and which are 4.1.6 Amber breach situations shall
corrected in a timely manner include the following:
when identified, provided that
any effect on contributors‟ (a) Several „green‟ breaches, which
benefits is negligible. for effectively stem from the same
example: cause such as a systems
(i) failure to invest a month‟s failure, teething problems with
contributions promptly, in new systems or processes or
accordance with laid down the absence of a critical
procedures; member of staff. Where the
PFA/PFC is taking effective
action to alleviate and remedy
(ii) failure to pay benefits the problems, the Commission
correctly or in a timely shall not require a report. If
manner; and on the other hand, inadequate
systems or processes are to
blame and the PFA/PFC is not
(iii) failure to provide an RSA taking effective steps to
holder with timely or improve or replace them, then
correct information, the Commission shall expect a
within the PFAs reach, report.
after three demands in
writing over a period of
ten (10) working days. (b) PFAs/PFCs have been
hindered in their attempts to
comply with regulatory
(b) Failure to adhere precisely to requirements by their service
the detail of the legislation providers for example where,
where the breach is unlikely to despite the best efforts of the
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7June 2008
PFA/PFC, its service provider and places where possible, and the
continuously provides poor reason why he/she is particularly
service resulting in persistent concerned about the situation.
or widespread non-compliance;
the Commission shall expect a 5.1.1 The provisions of 5.1
report. notwithstanding, a whistle blower
who is unable to put his/her
concern in writing, may contact an
(c) Failure by the PFA/PFC to appropriate officer of the
take all reasonable and proper Commission.
measure to recover all debts
and monies due to the fund 5.1.2 An intending whistle blower shall
within a reasonable amount of be required to report the concern in
time. Such shall constitute a a timely manner.
breach of trust and the
5.1.3 Although the whistle blower shall
Commission shall expect a
be not expected to prove the truth
report.
of an allegation, he/she shall need
to demonstrate that there are
(d) Failure of the PFA to monitor sufficient grounds for the concern.
and control fees and/or other
5.1.4 The whistle blower is encouraged to
expenses being charged by
put his/her name to his/her
service providers shall
allegations. Concerns expressed
constitute a breach of trust
anonymously shall be much less
where they are paid from the
powerful, but they shall be
fund. The Commission shall
considered at the discretion of the
expect a report in this
Commission.
circumstance, except where it
is in respect of an approved 5.1.5 In exercising its discretion, the
existing scheme, where the Commission shall take into account
employer is paying the balance the following considerations:
of cost.
(a) the seriousness of the issues
raised;
4.1.7 The examples of red, green and
(b) the credibility of the concern;
amber scenarios listed in 5.1.4 to
and
5.1.6 above, are by no means
(c) the likelihood of confirming the
exhaustive.
allegation from attributable
sources.
5.0 Procedures for Whistle
Blowing
6.0 Enforcement and Penalties
5.1 Concerns shall be reported in
writing. The whistle blower shall 6.1 Enforcement of this Guideline shall
set out the background and history be the responsibility of the
of the concern, giving names, dates Commission.
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8June 2008
6.1.1 Where the Commission concludes
that serious matters that should
have been reported to it have not
been reported in a timely fashion,
the Commission shall have a range
of penalties at its disposal,
including the levying of fines on the
company or the individual(s).
6.1.2 While there is no guarantee that all
material failures to report will
become known to the Commission,
most failures to report are likely to
eventually lead to an event that
becomes apparent to the
Commission, possible at too late a
stage for effective intervention. At
this point, the Commission shall
consider applying appropriate
sanctions.
6.1.3 The knowledge that this may
happen should act as a deterrent to
non-reporting.
6.1.4 If an allegation is made in good
faith, but it is not confirmed by the
investigation, no action shall be
taken against the whistle blower. If
however, the whistle blower made
allegations that were malicious or
simply to cause anger, irritation or
distress, disciplinary action may be
taken against the whistle blower.
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