Pension regulator, the National Pension Commission (PenCom) has recovered N13.7 billion from employers of labour who defaulted in the remittance of their employee’s pension contributions as provided in the Pension Reform Act 2014.
The amount covers recoveries of unremitted pensions and accrued interest penalties by PenCom appointed recovery agents between 2012 when they were appointed to end of December 2017.
PenCom’s report accessed by BusinessDay, shows that, as at the fourth quarter 2017, the sum of N2, 293,620,725.71 had been recovered by the Agents.
This brings the total recoveries made by the Agents since inception of the recoveries in 2012 to N13,695,155,214.88 representing principal contribution of N6,947,552,487.43 and penalty of N6,747,602,727.45.
PenCom in 2017 filed cases against 61 employers that failed to remit outstanding pension contributions and penalty as established by the Agents, and have since continued to record success with respect to matters at the tribunal.
During the fourth quarter of 2017, the Commission re-engaged 14 Agents to recover outstanding pension contributions and penalties for late remittances and following the re-engagement, 262 employers were assigned to the Agents.
“Most of the employers have requested to settle out of court, while others have remitted their outstanding pension contributions with penalty to the respective Retirement Savings Accounts (RSAs) of their employees, the Commission stated.
The Commission in its latest compliance report said, it has continued to apply various strategies to ensure compliance with the provisions of the Pension Reform Act (PRA) 2014.
“This included the application of sanctions and collaboration with key stakeholders on public enlightenment campaigns as well as engagement of defaulting employers via pension recovery agents employed by the Commission to recover unremitted pension contributions.”
Other activities of the commission to enhance compliance was issuing of compliance certificates.
“During the period under review, the Commission received 1,288 applications for issuance of Pension Clearance Certificate (PCC). Out of that number, 1630 certificates were issued, while the sum of N73.9 billion was remitted into the Retirement Savings Accounts (RSAs) of 232,150 employees of 4,953 organizations as at the fourth quarter 2017.
A review of the aggregate total contribution shows that the public sector contributed 51.20 percent of the total contributions, while the private sector contributed the remaining 48.80 percent. However, during the quarter under review, the Public sector contributed 51.39 percent of the total contributions received while the Private sector contributed 48.61 percent.
The aggregate total pension contribution of the private sector increased from N2.12 trillion as at the third quarter of 2017 to N2.19 trillion as at the fourth quarter of 2017 representing a growth of 3.40 percent. Whereas, the aggregate total pension contribution of the public sector grew by 3.42 percent from N2.22 trillion to N2.30 trillion over the same period.
Meanwhile, total pension assets under management stood at N7.5 trillion as at the end of December 2017, while the number of registered employees stood at 7.9 million people.
Susan Oranye, executive secretary, Pension Fund Operators Association of Nigeria (PenOp) had said “the recovery agents have done a good job when you consider the amount of money they have recovered.”
Analysts at Investment One Pensions Managers Limited said the rate of unfunded accounts recorded in the Pension industry has become very worrisome not just to the Commission but also to the industry operators and as a result, PenCom appointed some agents to take up the uphill task of collecting unremitted contributions on behalf of the Pension Fund Administrators.
The Pension Reform 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.
It went further to state that any employer who fails to deduct or 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 penalty referred to in the Act shall not be less than 2 percent of the total contributions that remains unpaid for each month or part of each month the default continues and the amount of penalty shall be recoverable as a debt owed to the employees retirement savings account, as the case may be.
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