Employers that failed to remit their employees’ pensions to their Pension Fund Administrators after deductions are now paying higher penalties, data from the National Pension Commission (PenCom) have revealed.
Through appointed recovery agents, the defaulting employers are made to pay unremitted contributions alongside accrued interest and penalties, which figures show doubled the principal amounts.
According to the first quarter 2022 report of the pension industry released Tuesday by PenCom, appointed recovery agents realised from 23 defaulting employers the sum of N422.34 million, out of which N124 million represents principal contribution, and N295.45 was penalty.
The report for the fourth quarter of 2021 showed that the appointed recovery agents realised N984.23 million from 36 defaulting employers, representing N406.42 million as principal contribution and N577.87 million as penalty.
The results reflect higher penalties for defaulters, and most times double, according to industry analysts who are keenly looking at the figures.
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, during the 2022 Stanbic IBTC Pension Managers Employers’ Forum in Lagos on Tuesday, called on employers to make prompt remittance of their workers’ pension deductions.
Dahir-Umar, represented by Babatunde Alayande, head of South-West Zonal Office of PenCom, said to equip employees for a better future, employers are expected by Pension Reform Act (PRA 2014) to ensure the remittance of pension contributions of employees into their Retirement Savings Account (RSAs) within seven days of salary payment.
“Pension contributions are expected to be remitted into the RSAs of employees within seven days of salary payment,” he said.
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According to her, employers are also expected to open nominal RSAs for employees who have refused to open their own RSAs, and once the nominal RSAs is opened on behalf of such employees, the employers are expected to commence pension contribution remittance into that nominal RSAs until the employee opens their RSAs.
She said: “Pension will be smart if the employers also provide a group life insurance cover for all its employees in order to take care of any risk that may arise, especially following the demise of any worker.
“Pension can only be smart if an employer who does not open or makes provision for group life insurance cover can also make an alternative arrangement by which insurance claims can be paid; this is also allowable,” she explained.
Olumide Oyetan, managing director/CEO of Stanbic IBTC Pension Managers, implored employers to put in place a robust retirement benefits scheme for their employees.
According to him, having a robust retirement benefits scheme in an organisation, demonstrates the employer’s commitment to the future of its employees and this, in turn, improves employees’ loyalty and productivity.
“A lot is currently going on within the pension space and this forum has always been our avenue to discuss and collaborate with various stakeholders to find solutions to various challenges that plagued pension administration as well as improve service efficiency to you as employers as well as employees that you represent,” he said.
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