PenCom recovers N10.97bn pension liabilities from defaulting employers

The National Pension Commission (PenCom) through its appointed recovery agents has recovered unremitted pensions from defaulting employers to the tune of N10.97 billion as at third quarter of 2016.

PenCom as part of efforts towards recovery of outstanding contributions and interest penalty from defaulting employers, issued demand notices to defaulting employers.

Consequently, forty five employers during the third quarter 2016  remitted the outstanding pension contributions and penalty to the tune of N775.60 million.

The commission in its latest report on compliance, said it has continued to apply various strategies to ensure compliance with the provisions of the Pension Reform Act (PRA) 2014, which included the application of sanctions and collaboration with key stakeholders on public enlightenment campaigns as well as engagement of defaulting employers via pension recovery agents employed by the Commission to recover unremitted pension contributions.

On update on compliance by the Private Sector, the Commission during the review period received a total of 3,475 applications for issuance of Compliance Certificates. Out of this figure, Compliance Certificates were issued to 3,374 organizations while applications from 101 were turned down due to incomplete documentations and the sum of N12.19 billion was remitted by the 3,374 organizations that were issued certificates.

Susan Oranye, executive secretary, Pension Fund Operators Association of Nigeria (PenOp) said “the recovery agents have done quite a good job when you consider the amount of money they have recovered”.

I believe they are still active and doing their job. But if you have not seen them where they are suppose to be or they have been quite, it could be as result of the changes in PenCom, Oranye said.

“But I will get across to PenCom, and update you on what they are doing at the moment, she responded in a telephone call.

Analysts at Investment One Pensions Managers Limited said the rate of unfunded accounts recorded in the pension industry has become very worrisome not just to the Commission but also to the industry operators and as a result PenCom appointed some agents to take up the uphill task of collecting unremitted contributions on behalf of the Pension Fund Administrators.

The analysts also stated that a critical examination of this high rate of unfunded accounts reveals that it is as a result of combination of factors including: Fictitious registration; Compliance issues; Increase in the rate of contribution; Economic down turn, as well as Integrated Payroll and Personal Information System (IPPIS).

According to them, many employers have refused to comply with the provisions of the Pension Reforms Act (PRA) 2014 as amended with respect to remittance of employee contribution. Some employers deduct pension contributions but refuse to remit, while some remit the employees contribution and keep back the employers portion.

Under the defunct PRA 2004, the rate of pension contribution was a minimum of 15 percent of monthly emolument of the employee, shared into seven and a half percent (71/2) each for the employer and the employee respectively. “These rates have been reviewed upwards by Section 4(1) of the PRA 2014, to a minimum of ten percent (10 percent) for the employer and a minimum of eight percent (8 percent) for the employee thereby making it a minimum of eighteen percent (18 percent) of an employee’s monthly emolument.

“The appointment of recovery agents for un-remitted contribution is yielding result as defaulting companies are now in a hurry to remit outstanding contributions they have deducted to avoid paying penalties, the analysts said.

The Pension Reform Act states that the employer shall deduct at source the monthly contribution of the employee in his employment and not later than seven working days from the day the employee is paid his salary, remit an amount comprising the employee’s contribution and the employer’s contribution to the custodian specified by the pension PFA of the employee.

It went further to state that any employer who fails to deduct or 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 referred to in the Act shall not be less than 2 percent of the total contributions that remains unpaid for each month or part of each month the default continues and the amount of penalty shall be recoverable as a debt owed to the employees retirement savings account, as the case may be.

Modestus  Anaesoronye