Want to participate in government business, comply with CPS

A re you a registered private corporate institution in Nigeria, seeking to participate in any federal government business either as contractor, supplier, consultant or other service providers, you are required to show evidence of full compliance with provisions of the Pension Reform Act 2014.

You will be required by the Bureau of Public Procurement (BPP) among other agencies to provide compliance certificate issued to you by the National Pension Commission (PenCom), as evidence that you have fully embraced the Contributory Pension Scheme (CPS).

The Pension Reform Act 2014 mandates corporate organisations having more than three employees to enrol in the Contributory Pension Scheme(CPS) make sure deductions from workers salaries and remitted as and when due, and also provide group life insurance on behalf of their employees.

While many organisations are complying with the regular pension’s contributions under CPS, many are still not complying with provision for group life insurance.

The Act makes it compulsory that employers of labour who have up to three or more employees must as matter of legislative requirement take life insurance cover for their workers.

That, beyond complying with provisions of the law on CPS, life insurance is another aspect of the employee welfare scheme that employers must provide. Otherwise, the affected organization risks being sanctioned by the pension regulator, the National Pension Commission (PenCom). PenCom in an advertorial recently gave March 31 as deadline for employers of labour to comply or be sanctioned.

The advertorial with the theme “Compliance with guidelines for life insurance policy for employees and submission of insurance certificate”

In accordance with the provisions of Section 4(5) of the Pension Reform Act (PRA) 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 3 times their respective annual total emoluments (ATE).

Employers that have not yet submitted copies of Insurance Certificate for the current year to the Commission are therefore advised to do so before 31 March 2017, failing which the National Pension Commission would consider such employers in default of Section 4(5) of the Pension Reform Act (PRA) 2014. The advertorial further stated that compliance with PRA 2014 is not complete without the Group Life Insurance Policy.

It is the right of an employee to have a group life insurance. It is a scheme that can be likened to a death-in-service policy, designed to pay a benefit called the sum assured to the next of kin or dependants of an employee who dies in active service.

Life insurance policy involves the payment of a premium to the insured against the death of an employee either by natural or accidental causes. It is wholly paid for by the employer and enjoyed by the employee if the death occurs prior to terminal date. The policy also can  provide  for  accident  at  work  that  results  in  permanent  disability  as  well  as  cover  for  burial expenses by way of extension to the policy. It therefore demonstrates to employees that the employer places a great premium on their lives and contributions to the development of the organisation.

PenCom as at March 1, 2017, has issued 2467 compliance certificates to firm’s that had embraced the Contributory Pension Scheme (CPS) to enable them bid for government’s contract.

PenCom in a presentation to the National Assembly Joint Committeeon Budget stressed that few contractors now seek the certificate due to the reluctance of MDAs to ensure that contractors seeking government’s jobs complied with the law as enunciated in the Public Procurement Act 2007.

“All MDAs are required to demand for the Compliance Certificate as a requirement for transacting any business with private sector organisations. Appropriate circulars have been issued to all MDAs in that regard.”

“Also, the Commission monitors advertisements for contract by MDAsto ensure that compliance with the PRA 2014 is included as pre-qualification criteria to participate in such jobs.”

The main reason for the low number of requests, the Commission noted is being the reluctance of MDAs to ensure that companies bidding for works have fulfilled their obligations relating to pensions as enunciated in the Public Procurement Act 2007.

The Commission further stated that to address the lapses, it had agreed with the Bureau of Public Procurement (BPP) that henceforth, only Certificates it issued would be the valid evidence of compliance with the Public Procurement Act 2007.

“The Commission undertakes regular advertisement of the requirements for issuance of the certificate and ensure prompt issuance. In addition, the Commission now hosts the compliance status of companies on its website for easy scrutiny and verifications.

“The Commission has been working with the Financial Reporting Council (formerly Nigeria Accounting Standard Board), through a Joint Committee, to include report on compliance with the provisions of the PRA 2014 as part of the disclosure requirements in Audited Financial Statement of all organizations that employ a minimum of three staff,” PenCom said.

It maintained that whilst the Committee is yet to conclude its work, it is expected that the new International Financial Reporting Standards (IFRS) would recognise compliance with the provisions of the PRA 2014 as part of the disclosure requirements in the Audited Financial Statement of all organisations that employ a minimum of three staff.