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Pension compliance strengthened as recovery agents pull in N22.13bn

Pension compliance strengthened as recovery agents pull in N22.13bn

Efforts to strengthen pension remittance compliance by employers of labour has continued to gain traction, as recovery agents since inception has pulled in N22.13 billion.

According to data from the National Pension Commission (PenCom), from the commencement of the recovery exercise in June 2012 to 30 June 2022, a total of N22.13 billion, comprising of principal contributions (N11.441 billion and penalties N10.690 billion was recovered from defaulting employers.

Second quarter report of the PenCom reveals that following the issuance of demand notices to defaulting employers whose pension liabilities were established by the Recovery Agents (RAs), the sum of N721,120,251.46 representing principal contribution (N517,654,905.94) and penalty (N211,465,345.52) was recovered from 20 defaulting employers during the quarter under review.

At the same time, seven defaulting employers have been recommended for appropriate legal action, after all administrative steps taken to make them comply failed.

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, PenCom during the 2022 Stanbic IBTC Pension Managers Employers’ Forum with the theme “Pension Smart: Equipping Employees For a Better Future” held in Lagos on Tuesday called on employers to make prompt remittance of their workers’ pension decutions.

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Dahir-Umar represented by Babatunde Alayande, head, South West Zonal Office of PenCom said for pensions to be smart in order 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 stated.

According to her, for pension to be smart employers are also expected to open nominal retirement saving account for employees who has refused to open their own retirement saving accounts and once the nominal RSA is opened on behalf of such employee, the employer is expected to commence pension contribution remittance into that nominal RSA until the employee opens his RSA.

According to the Commission, 12,760 applications from private sector organizations for the issuance of Pension Clearance Certificates (PCCs) during the second quarter 2022.

“Out of this number, PCCs were issued to 10,085 organizations, while 2,675 applications were being processed.”

The records showed that the 4,025 organizations had remitted a total sum of N43, 778,899,890.04 into the Retirement Savings Accounts (RSAs) of their employees, totalling 141,701.

The contributions remitted to individual RSAs in Q2 2022

stood at N238.75 billion, and out of this total, the public sector accounted for N136.79 billion or 57.29 percent, while the private sector contributed N101.96 billion or 42.71 percent.

The cumulative pension contributions from inception to the end of the second quarter of 2022 amounted to N8.01 trillion, which is an increase from N7.77 trillion as at the end of Q1 2022.

The aggregate pension contributions of the public sector increased from N4.02 trillion in Q1 2022 to N4.15 trillion as at the end of Q2 2022. Similarly, the aggregate pension contributions of the private sector also increased from N3.76 trillion in Q1 2022 to N3.86 trillion as at the end of Q2 2022.