The National Pension Commission (PenCom) says its recovery initiative has successfully reclaimed N25.13 billion from defaulting employers.
In a statement on Friday, the commission said the fund was recovered from the inception of its recovery initiative in June 2012 through September 30, 2023.
According to PenCom, the sum comprises N12.80 billion principal contributions and N12.33 billion penalties for delayed payments.
The commission cited the Pension Reform Act of 2014 (PRA 2014) which stipulates that all eligible employees must maintain a retirement savings account (RSA) with a pension fund administrator (PFA) of their choosing.
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Once an RSA is established, PenCom said 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 8 percent from the employee and 10 percent from the employer,” PenCom said.
“However, it is essential to note that the 18% 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.
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“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 2 percent of the total unpaid contributions for each month or part thereof. This penalty amount 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 all 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).”
HOW PENCOM EMPOWER RECOVERY AGENTS TO PURSUE DEFAULTING EMPLOYERS
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According to PenCom, the recovery agents (RA) start the recovery process by obtaining a list of delinquent employers.
“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,” PenCom said.
“The RAs then collect evidence of payments, which is forwarded to the Commission for confirmation by the Pension Fund Custodians (PFCs).”
PenCom added 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.
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