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The short answer
Yes. Section 4(5) of the Pension Reform Act 2014 requires every employer it covers to maintain a group life insurance policy for its employees, with cover of at least three times each employee's annual total emolument, and PenCom says the certificate must be displayed. The employer pays the premium, and the benefit goes to the employee's named beneficiaries if they die in service.
UK employers are used to death-in-service cover as an optional benefit. In Nigeria it is a legal requirement under the pension law, and PenCom checks it before issuing the pension clearance certificate that Nigerian clients and government buyers often ask for.
What the law requires
PenCom's notice on group life insurance cites section 4(5) of the Pension Reform Act 2014: every employer shall maintain a Group Life Insurance Policy in favour of each employee for a minimum of three times the employee's annual total emolument. The notice adds that, under the revised GLIP guidelines, the employer must display the policy certificate conspicuously. KPMG's 2014 summary of the Act gives the same three-times minimum and says the benefit is paid to the beneficiary the employee names.
Which employers
The duty sits inside the pension law, so it follows the Act's coverage of employers. PenCom's March 2026 step-by-step guide to the Pension Clearance e-Certificate asks employers to certify at least three staff. Confirm with PenCom or your pension fund administrator whether your headcount brings you in scope; with a Lagos team of any size, assume it does until told otherwise.
What "annual total emolument" means in practice
Total emolument is wider than basic salary. It usually includes the regular allowances in the employee's package. When you request quotes, give insurers each employee's full annual package, not only basic pay, so the sum assured meets the minimum.
Worked example
| Employee (example) | Annual total emolument | Minimum cover (3×) |
|---|---|---|
| Developer | ₦7,200,000 | ₦21,600,000 |
| Operations lead | ₦9,600,000 | ₦28,800,000 |
| Office assistant | ₦2,400,000 | ₦7,200,000 |
| Team total | ₦19,200,000 | ₦57,600,000 |
Example figures only. Check: ₦7,200,000 + ₦9,600,000 + ₦2,400,000 = ₦19,200,000; × 3 = ₦57,600,000. The premium depends on the insurer, the team's profile and the cover chosen; the law sets the minimum cover, not the price.
How it fits with the pension clearance certificate
PenCom's March 2026 guide lists group life insurance among the documents for the Pension Clearance e-Certificate, together with the staff list as registered with each PFA, evidence of payment and the contribution schedule. The portal is pcc.pencom.gov.ng and the guide says the e-certificate is issued within 72 hours unless rejected. Without current group life cover, the certificate stalls, and with it any contract or process that needs it.
Choosing and running the policy
PenCom's 2023 FAQ says the employer pays the premium and that the cover applies while the employee is in active service. That shapes how you run it:
- New starters. Add them from their first day. A gap between hire and the next renewal is the most common shortfall.
- Pay rises. Cover is tied to annual total emolument, so a pay review can push someone below three times their package. Send the insurer updated figures after each review.
- Leavers. Remove them at the end of service and keep the dates, so the premium reconciliation matches payroll.
- Brokers. A Lagos broker can compare quotes, but the duty to maintain cover stays with the employer.
Common gaps in UK-owned teams
- Relying on a UK group policy that does not cover Nigerian employees, or covers them at a multiple of basic pay only.
- Buying cover once and never renewing it.
- Not displaying the certificate in the Lagos office.
- Missing beneficiary forms, which delays payment when it matters most.
- Treating group life as a substitute for pension contributions or health cover; it is a separate obligation alongside both.
A short annual check, run at the same time as the pay review, catches most of these: compare the insurer's schedule of members and sums assured with the payroll list, line by line.
If an employee dies in service
PenCom's 2023 FAQ describes the employer, next of kin or representative notifying the PFA, which notifies PenCom; the employer ensures the group life benefit goes to the named beneficiaries, and the employee's retirement savings account balance is paid to the executors or administrators. Keep beneficiary nominations up to date as part of the annual HR review.
Steps for a UK-owned employer
- Confirm the employing entity in Nigeria and its staff list.
- Collect each employee's annual total emolument and beneficiary nomination.
- Get quotes for cover of at least three times total emolument per person.
- Pay the premium, file the policy and display the certificate in the office.
- Add renewal to the payroll calendar and update cover when pay changes.
- Include the policy when applying for the pension clearance certificate.
Related: pension contributions for Nigerian staff, health insurance for Nigerian staff and employer and employee pension rates.
Where Pryme fits
Insurance premiums, pension remittances and payroll can all be paid in naira from one Pryme Business Account, with the Finance agent preparing renewals and payments for a person to approve (Finance agent). Naira deposits are held by a licensed Nigerian microfinance bank.
Questions people ask
Is group life insurance compulsory for employers in Nigeria?
Yes for employers covered by the Pension Reform Act 2014. Section 4(5) requires a group life policy for each employee.
How much group life cover is required?
At least three times the employee's annual total emolument, per PenCom's notice.
Who pays the group life premium?
The employer. It is not deducted from staff pay.
Do I need group life for the pension clearance certificate?
Yes. PenCom's March 2026 guide lists group life insurance among the documents for the e-certificate.
Sources
- PenCom: Notice on Group Life Insurance Policy, section 4(5) PRA 2014 · accessed Oct 2026
- KPMG Nigeria: Summary of the Pension Reform Act 2014 (Jul 2014) · accessed Oct 2026
- PenCom: Step-by-step guide on the Pension Clearance e-Certificate (Mar 2026) · accessed Oct 2026
- PenCom: Frequently asked questions 2023 · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.