Adewale worked in a private engineering firm in a highbrow area of Lagos and was retired in February 2020 when he clocked 55 years.
He had hoped to live on his pensions after retirement, having registered with a Pension Fund Administrator (PFA), where his pension contribution was supposed to be remitted at the end of every month.
Though Adewale was aware that remittance by his employer was not regular, he believed his employer would pay the outstanding remittance to enable him to access what he has accumulated in his Retirement Savings Account (RSA) during his retirement.
Therefore, he had gone to meet with his PFA, having done a data recapture some months before he was relieved of his employment in 2020.
But to his chagrin, his PFA told him that he could not access his pensions for retirement until the unremitted part of the contributions was paid by his employer or until he consented to be paid after his employer had been contacted and there was no response.
At this time, it became clear to Adewale that what he had in the RSA to fall back on was not good enough to make him enjoy his retirement and spend as much as he would want to.
So, he got across to his lawyer to pursue the payment by his employer, who was at the time struggling to keep afloat, having suffered some setbacks in recent years.
It has been about three years now since Adewale retired with nothing coming from his employer to cover the outstanding unremitted contributions.
At the moment, Adewale is confused and cannot meet his basic needs due to his employer’s failure to regularly remit his pension contributions. He has however asked his PFA to process what is available in his RSA balance so that he can start receiving something for retirement.
There are many Nigerians with similar experiences like Adewale and who do not know how to go about it.
The question is, what does the law say about incomplete RSA balance due to irregular remittance or unpaid accrued rights.
For the private sector, the retiree could decide to forgo what is outstanding to access the amount available in the RSA for pension options, while for the public sector, the law is sacrosanct concerning accrued rights.
Accrued pension rights represents an employee’s benefits for the past years of service up to June 2004, when the Pension Reform Act that birthed the Contributory Pension Scheme (CPS) came into effect.
The objectives of CPS are to ensure that everyone who worked in either the public service of the Federation, Federal Capital Territory, states, and local governments or the private sector receives their retirement benefits as and when due; and to assist improvident individuals by ensuring that they save to cater for their livelihood during old age.
Seun Babalola, executive director of NLPC Pension Fund Administrator, said that in the private sector, the RSA holder must in writing give consent to the PFA for his remitted funds to be used for pension irrespective of what is outstanding with his former employer.
He noted that this is the only condition for the RSA balance to be used for payment of pension while the outstanding from the PFA can be received later.
Session 15 (1) of the Pension Reform Act 2014 provides that “as from 25 June 2004, being the commencement of the Pension Reform Act, 2004, the accrued pension right to retirement benefits of any employee who is already under any pension scheme existing before the commencement of that Act and has over 3 years to retire shall: In the case of employees of the Public Service of the Federation where the scheme is unfunded, be recognised in the form of an amount acknowledged through the issuance of Federal Government Retirement Benefits Bonds by the Debt Management Office in favour of the employees and the bond issued under this subsection shall be redeemed upon the retirement of the employee by section 39 of this Bill and the amount so redeemed shall be added to the balance of the retirement savings account of the employee and applied by the provisions of section 7 of this Bill.”
While sub-section (C) provides that “in the case of the employees of the Public Service of the Federation, Federal Capital Territory or in the Private Sector, where the scheme is funded, credit the retirement Savings accounts of the employees with any funds to which each employee is entitled and in the event of an insufficiency of funds to meet this liability the shortfall shall immediately become a debt of the relevant employee and shall have priority over any other claim.”
Abdulqadir Dahiru, director of corporate communications at the National Pension Commission, said the CPS by law requires both the employer and employee to contribute to the employee’s RSA.
“So, remittance is critical to the success of the scheme,” Dahiru said. “We have continued to engage employers through the recovery agents and a lot of progress is being made.”
“We also encourage whistle-blowers to give us information on employers that are not remitting, and we do not really need to know your name or who you are as long as the facts are right,” Dahiru added.
“For me, remittance is a big issue in the private sector and enforcement has not been as effective. Maybe PenCom is looking at faces or afraid of some sectors,” a contributor who identified himself simply as Egerue said.