Employers that defaulted in the remittance of their employees’ pensions have been made to pay over 100 percent of the unremitted funds as fines and penalties.
Organisations, particularly those seeking Federal Government contracts, are made to pay up their outstanding unremitted pensions to get the National Pension Commission’s (PenCom’s) clearance certificate that enables them to participate in bidding.
Compliance has also become more stringent following the activities of recovery agents engaged by the commission for the recovery of unremitted pension contributions and penalties from defaulting employers.
PenCom said in its latest report that from the commencement of the recovery exercise in June 2012 to June 30, 2023, a total sum of N24.80 billion has been recovered, consisting of principal contributions of N12.53 billion and penalties of N12.28 billion.
According to PenCom’s report for the second quarter, the recovery agents realised the sum of N268.12 million, comprising principal contributions of N84.04 billion and penalties of N184.09 billion, from 21 defaulting employers.
Meanwhile, the commission’s secretariat/legal advisory services department had been requested to take legal action against one defaulting employer.
The regulatory body also disclosed that the commission during the quarter under review processed and issued a total of 16,925 pension clearance certificates (PCCs) to organisations that met the requirements and the sum of N57.37 billion was remitted into the Retirement Savings Accounts (RSAs) of 178,324 employees of the 16,925 organisations issued PCCs.
Section 11 (6) of the Pension Act 2014 states that any employer who fails to remit the contributions within the time prescribed shall in addition to making the remittance already due, be liable to a penalty to be stipulated by the commission.
The penalty, according to the pension law, shall not be less than 2 percent of the total contribution that remains unpaid for each month, or part of each month that the default continues, and the amount of the penalty shall be recoverable as a debt owing to the employee’s retirement savings account as the case may be.
Aisha Dahir-Umar, director-general of PenCom, had called on employers to make prompt remittance of their workers’ pension deductions.
Dahir-Umar, who was represented by Babatunde Alayande, head of South-West Zonal Office of PenCom, at an event in Lagos, said for pensions to equip employees for a better future, employers are expected by Pension Reform Act 2014 to ensure the remittance of pension contributions of employees into their RSAs within seven days of salary payment.
To enhance compliance with provisions of the Pension Reform Act 2014 in respect of group life insurance and contribution remittances, PenCom, in an advertorial notice, charged employees to demand for their rights to life insurance policy and pension contributions.
It said: “This is to remind all employees in the public service of the Federation, Federal Capital Territory and states that have implemented the Contributory Pension Scheme as well as private sector, that it is their rights; under section 4(5) of the PRA 2014 to have life insurance policy taken on their behalf by their employers for an insured amount not less than three times their annual total emolument.
“Please note that employees are also required to ensure that all pension contributions deducted from salaries and/ or contributed by employers are remitted to the Pension Fund Custodian by the employer not later than seven working days from the date of payment of their salaries.”
The commission therefore advised employees to report to the commission where the employer fails to procure the minimum required life insurance policy in their favour, submit the evidence of compliance with life insurance policy to the commission and place the certificate in a conspicuous place within the organisation, and remit the deducted pension contributions into their RSAs.
In accordance with the provisions of Section 4(5) of the Pension Reform Act 2014 and Section 5.5 of the Guidelines for Insurance Policy for Employees, Employer of labour covered by the PRA 2014 are required to submit copies of the insurance certificate with the schedule of benefits to PenCom.
The insurance certificate should state that all employees are covered up to an amount not less than three times their respective annual total emoluments.
Employers that have not yet submitted copies of the insurance certificate for the current year to the commission were therefore advised to do so before 31 March each year, failing which the National Pension Commission would consider such employers in default of Section 4(5) of the Pension Reform Act (PRA) 2014.