PenCom recovers N25.1bn unremitted pension contributions

According to the report, the sum comprised N12.80 billion principal contributions, and N12.33 billion penalties for delayed payments.

The report read: “The Pension Reform Act of 2014 (PRA 2014) stipulates that eligible employees must maintain a Retirement Savings Account (RSA) with a Pension Fund Administrator (PFA) of their choosing. Once an RSA is established, the employee must furnish the employer with their RSA Personal Identification Number (PIN) issued by the PFA.

“Subsequently, the employer must deduct the employee’s monthly contributions within seven working days of salary disbursement, comprising eight per cent from the employee and 10 per cent from the employer.

“However, it is essential to note that the 18 per cent total monthly pension contribution represents the minimum, as employers can opt to increase the rate or bear the entire burden on behalf of the employee.

“Under the PRA 2014, an employer who fails to deduct or remit contributions within seven working days is subject to a penalty of not less than two per cent of the total unpaid contributions for each month or part thereof.This penalty is reclaimed as a debt and credited to the employee’s RSA.

“Recovery of outstanding pension contributions started with appointed Recovery Agents (RAs) in June 2012, and as of September 2023, 28 RAs are operating under PenCom’s supervision. This recovery endeavour aims to achieve several objectives, including reclaiming unremitted pension contributions along with penalties, ensuring that affected employees do not suffer income losses from investment delays, enhancing organisations’ compliance with the PRA 2014, and reducing employee complaints regarding non-remittance of pension contributions, thereby bolstering trust and acceptance of the Contributory Pension Scheme (CPS).”

The report further stated that the Commission employed the services of Recovery Agents (RA) and empowered them to go after defaulting organizations, after furnishing them with the necessary tools and appropriate directives.

“This is followed by securing letters of introduction from the Commission to the employers, introducing the RA and requesting cooperation in reviewing pension records with the organisation’s Human Resources Department to determine liabilities.

“Subsequently, demand notices are served to employers to remit outstanding pension contributions and penalties. The RAs, then, collect evidence of payments, which is forwarded to the Commission for confirmation by the Pension Fund Custodians (PFCs).

“It’s vital to highlight that the principal contributions and the recovered penalties are deposited into employees’ RSAs to compensate for the investment income that would have been accrued had there been no delays in employer remittances. Both PenCom and PFAs cover the recovery costs incurred by RAs, making it a cost-free for RSA holders. Pension contribution recovery efforts continue to yield significant results, with notable achievements in recovering primary contributions and associated penalties from non-compliant employers.

“As a case in point, during the third quarter of 2023, a total of N326.16 million was retrieved. This sum breaks down to N276.52 million in contributions and N49.64 million in penalties, collected from 24 employers who had defaulted on their obligations.

“Furthermore, PenCom pursues legal action against persistent defaulters who fail to remit pension contributions, ensuring accountability and adherence to the CPS. The commitment of employers to comply with the CPS is highly commendable.

“PenCom issued an impressive 6,053 Pension Compliance Certificates (PCCs) to employers in the same period, signifying their commitment to the system. The sum of N35.59 billion was remitted into the RSAs of 98,887 employees working within the organisations granted PCCs, underlining the positive impact of these efforts.”

The Regulatory body urged employees of organizations to report employers who are non-compliant with their pension contributions or are not adhering to the specified rates (10 per cent employer and eight per cent employee) outlined in the PRA 2014.

It reiterated its commitment to effectively regulate and supervise the industry to ensure retirement benefits were paid promptly.