Pension Fund Administrators and managers of the Contributory Pension Scheme (CPS) have received a total of N16.01 billion pension liabilities and accrued penalties from defaulting employers since inception of the Scheme, following the engagement of recovery agents by the National Pension Commission (PenCom).
This comprises of principal contributions of N8.22 billion and penalty of N7.79 billion, which has since been credited to the respective Retirement Saving Accounts (RSAs) of the affected employees.
During the second quarter of 2019, demand notices were issued to 37 defaulting employers whose pension liabilities had been established by the Recovery Agents ( RAs), which resulted in the remittance of outstanding pension contributions of N260.62 million, representing principal contributions of N151.59 million and penalty of N109.64 million.
The National Pension Commission (PenCom) through its appointed recovery agents has continued to follow up with defaulting employers who collect employee’s pension contributions without remitting and those who have not implemented the scheme as provided in the Pension Reform Act 2014.
The RAs were mandated to review the pension records of the employers assigned by the Commission with a view to recover outstanding pension contributions with penalty.
Further to the Commission’s strategy of driving compliance with the provisions of the PRA 2014 by employers through the conduct of public awareness programmes, the Commission has continued to organize sensitization workshops on the Contributory Pension Scheme (CPS) for employers’ associations/unions to enlighten and encourage them to key into the Scheme.
The Commission in collaboration with the Nigeria Employers’ Consultative Association (NECA) during the period under review conducted an interactive session on the current developments and challenges in the implementation of the Pension Reform Act, 2014 for the organized private sector in Lagos, Port Harcourt, Abuja and Kano.
Compliance by the private sector during the period under review shows that the Commission received 6,480 applications for the issuance of compliance certificate, out of which 6,433 certificates were issued, while 47 applications were declined due to non-remittance of pension contributions for the appropriate period and/or non-provision of Group Life Insurance Policy for the employees. The sum of N28.96 billion was remitted to 96,308 employees’ RSAs by the 6,433 organizations that were issued with compliance certificates.
The pension industry also recorded a 1.78 percent growth in the scheme membership during the second quarter of 2019, moving from 8.63 million contributors at the end of the preceding quarter to 8.79 million. The growth in the industry membership was driven by the Retirement Savings Account (RSA) Scheme, which had an increase of 153,572 contributors representing 1.79 percent. However, membership of the Closed Pension Fund Administration (CPFA) Scheme declined by 58 members (23,258) while the Approved Existing Scheme (AES) membership remained unchanged at 40,951.
The RSA registrations grew to 8,722,609 as at second quarter, 2019 moving from 8,569,037 as at first quarter, 2019, representing a growth of 1.79 percent (153,572). The growth can be attributed to the increased level of compliance by the private sector as a result of the various steps taken by the Commission to improve compliance and coverage, as well as marketing strategies of the PFAs.
Meanwhile, the total monthly pension contributions received from contributors from both the public and private sectors was N5.45 trillion as at the end of the Second quarter, 2019.
This shows an increase of N169.90 billion representing 3.22 percent growth over the total contributions as at the end of the previous quarter. During the review period, the total contributions received from the public sector amounted to N72.42 billion (42.63 percent) while the private sector contributed N 97.48 billion (57.37 percent). A review of the aggregate total contribution received shows that N2.73 trillion or 50.09 percent of the contributions came from the public sector, while the private sector contributed the remaining 49.91 percent (N2.72 trillion).
The aggregate total pension contributions of the private sector increased from N2.62 trillion as at first quarter of 2019 to N2.72 trillion as at the end of the reporting period representing a growth of 3.72 percent. Whereas, the aggregate total pension contribution of the public sector increased by 2.72 percent from N2.66 trillion to N2.73 trillion over the same period.
The objectives of the Pension Reforms are to ensure that every person who worked in either the Public Service of the Federation, Federal Capital Territory or Private Sector receives his retirement benefits as and when due.
It is also to assist individuals by ensuring that they save in order to cater for their livelihood during old age and thereby reducing old age poverty; and also to ensure that pensioners are not subjected to untold suffering due to inefficient and cumbersome process of pension payment.
It also aims at establishing a uniform set of rules, regulations and standards for the administration and payments of retirement benefits for the public service of the federation, federal capital territory and the private sector and stem growth of outstanding pension liabilities.
Modestus Anaesoronye
