For failure to remit monthly pension deductions of employees to their different Pension Fund Administrators (PFAs) as provided in the Pension Reform Act 2004, about 15, 092 employers in the private sector would be facing prosecution, BusinessDay reveals.
A document accessed by BusinessDay reveals that out of 15,427 employers discovered to have failed to remit their employees pensions for various periods running into billions between January 2010 and December 2011, only a few has complied with provisions of the Act.
Section 5 of the 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.
While section (7) further 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 National Pension Commission (PenCom) as part of the initiatives to recover unremitted pension contributions from private sector employers along with interest penalty, in 2012 engaged 173 interested Accounting and Legal Firms as Recovery Agents (RAs) for the exercise.
However, based on the review of the returns forwarded by the recovery agents to the Commission, it was established that 15,427 employers failed to remit pension contributions to their employees’ Retirement Savings Accounts (RSAs) for various periods between January 2010 and December 2011. Subsequently, the defaulting employers were distributed among the recovering agents to recover the outstanding contributions.
As at the end of September 2013, recovery agents established outstanding pension contributions and interest penalties amounting to N13.33 billion against 335 private sector employers and subsequently got PenCom’s approval to serve demand notices to the affected employers, which resulted in the recovery of N335.84 million and an interest penalty of N31.04 million as at end of September 2013.
According to industry sources, PenCom in furtherance of its compliance efforts plans to commence the issuance of notice of intention to prosecute the employers that failed to remit the outstanding pension contributions and interest penalty which sources say would commence soon.
The Contributory Pension Scheme (CPS) is mandatory for every employee in the Federal Public Service including employees of the Federal Capital Territory and employees in all private sector organizations that have more have up to five employees.
Employers by the Act are expected to deduct 7.5 per cent of the employee’s total emolument and also provide a counterpart funding of 7.5 per cent to be remitted into a Retirement Savings Account (RSA), which the employee is expected to open with any PFA of their choice. This makes up a minimum of 15 per cent to be paid into the employee’s RSA.
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