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Unremitted contributions: PenCom recovers N3.33bn from employers

By on November 9, 2013

The decision of the National Pension Commission to employ the services of recovery agents to go after employers, who fail to remit workers’ pension contributions, is paying off as it has recovered N3.33bn from defaulting organisations between January and now.

According to figures obtained from PenCom on Thursday, the recovery agents have successfully squeezed out N3.33bn from the employees’ who have been deducting monthly pension savings from their employers’ salaries without remitting same to the Retirement Savings Accounts of the workers.

PenCom decided to employ the recovery agents in 2012 after the Pension Fund Administrators established that at least 15,427 employers had failed to remit pension contributions to their workers’ individual RSAs between January 2010 and December 2011.

The commission had sent the recovery agents to the defaulting employers to retrieve all outstanding contributions along with the interest penalty.

PenCom had earlier begun the selection of the firms interested in working as recovery agents in line with Section 11(7) of the Pension Reform Act, 2004.

The agents, it said, were experts at forcing money out of defaulters.

The commission stated that it had employed different approaches to encourage the concerned employers to embrace voluntary compliance through public enlightenment, media campaign and collaboration with the regulatory and professional bodies.

Other means employed, it added, included engagement of consultants, disclosure requirement, issuance of compliance letters, financial literacy and enforcement.

The Chairman, Pension Fund Operators Association of Nigeria, Mr. Dave Uduanu, said the agents had achieved a lot in the recovery of outstanding pension contributions and interest penalties from defaulting employers.

He stressed the relevance of the Contributory Pension Scheme to ensuring financial security for workers in retirement.

“The new pension scheme called the Contributory Pension Scheme will ease the problem of retired workers in getting their retirement benefits,” Uduanu said.

According to him, the CPS is robust, safe and poised to help retirees live well after their active life in employment.

To a large extent, he added that the new pension scheme had placed in the hands of the contributor the responsibility for the contribution that would be made available in the RSA.

Upon retirement, Uduanu said the contributors would have to take their destiny in their hands, which was a major difference between the new pension system and the previous one.

Section 11 of the Act states that every employee is to maintain an individual RSA account in his name with any PFA of his choice and notify his employer of the identity of the PFA.

Employers are to deduct 7.5 per cent of the workers’ monthly emolument and add the same percentage to the workers’ contribution, which will ultimately be remitted to the workers’ RSA.

However, many employers have only been deducting the contributions without remitting them into the workers’ RSAs.

Under the CPS, the PFAs are to manage the pension contributions, while the Pension Fund Custodians keep the pension assets.