Employers that failed to remit employees’ monthly pension contributions to their respective Pension Fund Administrators (PFAs) have been fined N14.17 billion as penalties.
The amount, which was recovered in the 12 years of operations of the National Pension Commission (PenCom) by appointed Recovery Agents (RAs), forms part of total recoveries amounting to N27.97 billion, with N13.60 billion as principal contributions.
The second quarter report of PenCom just released showed that the regulator maintained the services of 25 RAs for the recovery of unremitted pension contributions and penalties from defaulting employers.
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 two 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.
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If after seven days of the payment of salaries any employer refuses for whatever reason to remit the pension contributions of his employee to the PFA where such employee has opened a Retirement Saving Account, the PFA is obligated to report the employer to PenCom if the funds are not received by the 14th day from the payment of salaries, an official of PenCom said.
Such an employer would be liable to a penalty in addition to the funds due, the senior official said.
Ivor Takor, director-general, Centre for Pension Right Advocacy, had said pension remittance should be taken seriously by employers because it’s been deducted from their salaries and the law says the deduction should be paid into the RSAs of the employees, not later than seven days after salaries are paid.
Further look into the PenCom report revealed the sum of N336.255 million comprising principal contributions of N125.57 million and penalties of N210.68 million were recovered from 35 defaulting employers in the second quarter of 2024.
According to PenCom, its secretariat/legal advisory services department had been requested to take legal action against three defaulting employers.
“From the commencement of the recovery exercise in June 2012 to 30 June 2024, a total sum of N27.97 billion comprising of principal contributions (N13.60 billion) and penalties (N14.17 billion) was recovered from defaulting employers.
Agudah Oguche, chief executive officer, Pension Fund Operators Association of Nigeria (PenOp), analysing the performance of the industry, said pension assets in Nigeria have experienced significant growth over the past few years.
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He said in July 2020, the total Assets Under Management (AUM) stood at N11.31 trillion and by July 2021, this figure had increased to N12.78 trillion, representing a year-on-year growth of approximately 13 percent.
The trend, he said, continued in July 2022, with the AUM rising to N14.36 trillion, marking a 12.4 percent increase from the previous year.
“In 2023, the pension assets saw an even larger jump, reaching N17.07 trillion, which is a notable 18.9 percent increase compared to July 2022. By July 2024, the AUM surged to N20.87 trillion, reflecting a remarkable 22.3 percent growth year-on-year, Oguche said
“This consistent upward trajectory illustrates a strong and expanding pension industry, with assets growing by over 84.5 percent from N11.31 trillion in 2020 to N20.87 trillion in 2024, demonstrating the increasing confidence in pension funds as a vital part of Nigeria’s financial ecosystem.”
The Pension Reform Act 2004, as amended in 2014 establishes a Contributory Pension Scheme (CPS) for all employees in the country to ensure that every person who worked in either the public service of the federation, Federal Capital Territory or private sector receives his retirement benefits as and when due.
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