Employers Pay N24B Penalties for Pension Default – The National Pension Commission (PenCom) has been turning up the heat on employers defaulting on their pension remittances, and the impact is profound. Over N24 billion has been recovered, marking a significant enforcement of Nigeria’s Pension Act.
Pension Defaulters: The Consequences
A recent report revealed that employers defaulting in their pension remittances face penalties exceeding the initial unremitted funds. In a move to promote compliance, companies vying for Federal Government contracts are now required to clear any outstanding pension dues. Only then will they receive PenCom’s clearance certificate, which is a prerequisite for bidding.
Recovery Agents to the Rescue
PenCom’s proactive approach doesn’t stop there. Recovery agents have been actively engaged since June 2012 to ensure unremitted pensions and penalties are retrieved from defaulting employers. As of June 30, 2023, a staggering N24.80 billion has been recovered. This comprises N12.53 billion in principal contributions and N12.28 billion in penalties. In just the second quarter, these agents fetched N268.12 million from 21 defaulting employers.
Legal Ramifications
PenCom isn’t hesitating to take legal action either. Their secretariat/legal advisory services department is already pursuing one defaulting employer.
Rewarding Compliant Employers
On the flip side, compliant organizations are being acknowledged. During the last quarter, PenCom issued 16,925 pension clearance certificates (PCCs) to compliant organizations. This translated to N57.37 billion being remitted into the Retirement Savings Accounts (RSAs) of 178,324 employees.
The Pension Act 2014: Clear and Precise
The Pension Act 2014 is unequivocal. Employers who delay contributions face penalties. This fine is a minimum of 2% of the total unpaid contribution for each month of delay. This amount is recoverable, ensuring employees don’t bear the brunt of corporate negligence.
Aisha Dahir-Umar, PenCom’s director-general, has consistently advocated for timely pension deductions remittance by employers.
Employees: Know Your Rights
PenCom has empowered employees to demand their rights. They’ve been advised to insist on life insurance policies and timely pension contributions. Employers are obligated to remit pension deductions within seven working days post salary payment.
Furthermore, employers must provide life insurance for their employees, covering at least three times their annual total emolument. As of now, employers are advised to submit copies of their current year’s insurance certificate to PenCom by March 31st every year.
It’s clear that PenCom is committed to enforcing the Pension Act, ensuring that employees’ futures are secure. While defaulting employers face significant penalties, those adhering to the regulations are recognized and rewarded. For Nigeria’s workforce, this is a testament to the government’s dedication to safeguarding their retirement and financial future.