Unremitted Pension: PenCom Fines Employers N12.1BN

By Christy Animam

The National Pension Commission (PenCom) has sanctioned some employers in the country with N12.1 billion fine for their failure to remit their employees’ monthly pension.

Since the commencement of its recovery exercise in June 2012 to 31 March 2023, PenCom has found the employers guilty of failing to remit pension funds estimated at N12.44 billion.

As the Commission succeeded in forcing the employers to cough the money, it has recovered N24.53 billion as the cumulative pension and fine from the defaulting employers.

PenCom Director-General, Mrs. Aisha Dahir-Umar, who disclosed this recently also explained that in the first quarter of 2023 alone, the Commission has recovered N384.28 million, comprising contributions of N193.06 million and penalties of N191.22 million.

“The amount was recovered from 34 defaulting employers,” she added.

Meanwhile, Mrs. Dahir-Umar called on employees to report employers who are either not remitting pension contributions or not paying the correct rates of 10 per cent employer and eight per cent employee as specified in the Pension Reform Act (PRA) 2014.

She said the commission ensures the recovery of unremitted pension contributions with penalties from employers that fail to remit pension contributions of their employees promptly.

She said the recovery of the outstanding pension contributions by appointed Recovery Agents (RAs) started in June 2012, adding that 28 RAs were engaged by the Commission as at this month.

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She said: “The exercise set out to achieve, among others, the recovery of unremitted pension contributions of employees with a penalty, to ensure that affected employees do not lose any income that they would have earned from the investment of the funds, secure full compliance of organisations with the PRA 2014, and also, reduce complaints of non-remittance of pension contributions by employees’ thereby boosting confidence and acceptability of the Contributory Pension Scheme (CPS).

“The Commission mandates Recovery Agents to follow up with the defaulting employers to ensure remittances of outstanding pension contributions. The recovery process requires the Recovery Agent to diligently follow the outlined steps, which commences with obtaining a list of assigned defaulting employers from PenCom, getting letters of introduction from the Commission to the employer introducing the RA and requesting the employer to co-operate with the RA for a review of pension records with the organisation’s Human Resources Department to determine liabilities, and finally serving demand notices to employers to remit outstanding pension liabilities plus penalties. Evidence of payments is obtained by the RAs and forwarded to the Commission for onward confirmation by the PFCs.

“It is pertinent to note that the principal contributions are remitted along with the penalties recovered and paid into employees’ RSAs to compensate for the accruable income from investment of pension funds lost due to non or late employer remittances,” she added.

She hinted that PenCom and PFAs bear the recovery cost due to the recovery agents, therefore, recovery of pension contributions is at no cost to RSA holders.

“The recovery of pension contributions is an ongoing process, and the Commission has substantially recovered both principal contributions and applicable penalties from employers. We also prosecute recalcitrant employers who persistently default on the remittance of pension contributions.”

She explained that the PRA 2014 provides that every employee should maintain a Retirement Savings Account (RSA) with any Pension Fund Administrator (PFA), noting that once an RSA is opened, the employee must inform their employer by submitting the RSA Personal Identification Number (PIN) issued by the PFA.

Subsequently, she said, the employer is required to deduct the monthly contributions of the employee, not later than seven working days from the day salary is paid, and remit an amount comprising eight per cent of the employee and 10 per cent employer contribution to the Pension Fund Custodian (PFC) specified by the PFA of the employee.

“It should be noted that the 18 per cent pension total monthly pension contribution is a prescribed minimum, as the employer may elect to increase the rate or bear the whole burden on behalf of the employee.

“The PRA 2014 states that an employer who fails to deduct or remit the contributions within the stipulated time frame of seven working days from the day salaries are paid shall, in addition to making the remittances already due, be liable to a penalty, which shall not be less than two per cent of the total contributions that remain unpaid for each month or part of each month the default continues.

“The penalty amount shall be recovered as a debt owed and paid into the employee’s RSA,” she noted.