Workers' Retirement Secured as PenCom Recovers N25bn Unremitted Pension Contributions From Employers
- PenCom has made remarkable success in the recovery of unremitted pensions from non-compliant employers
- According to PenCom, the recovered funds amounted to N12bn principal contributions and N12bn penalties
- Both PenCom and Pension Fund Administrators (PFAs) shoulder the expenses related to the recovery process
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Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the stock market.
The National Pension Commission (PenCom) has announced the successful recovery of N25.13 billion from employers who were in default.
This information was disclosed in a report released by PenCom, revealing that the recovered amount consisted of N12.80 billion in principal contributions and N12.33 billion in penalties for delayed payments.
Source: UGC
According to the report, these recoveries spanned from June 2012 to the previous month, as stated by PenCom.
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This follows PenCom's earlier revelation that 13,126 Nigerian workers who lost their jobs and are still under 50 withdrew N12.56 billion from their pension fund contributions in the first three months of 2023.
Employers obligated to make monthly deductions
As per the provisions of the Pension Reform Act of 2014 (PRA 2014), it is a requirement for eligible employees to establish a Retirement Savings Account (RSA) with a Pension Fund Administrator (PFA) of their choice.
Once the RSA is in place, the employee is obligated to provide their RSA Personal Identification Number (PIN), issued by the PFA, to their employer.
Following this, the employer is responsible for deducting the employee's monthly contributions, usually within seven working days of salary disbursal.
These contributions consist of 8% from the employee and 10% from the employer.
It is worth emphasizing that the total monthly pension contribution of 18% is the minimum requirement.
Employers have the option to increase this rate or entirely cover the contribution on behalf of the employee.
The report stated:
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% of the total unpaid contributions for each month or part thereof. This penalty is reclaimed as a debt and credited to the employee’s RSA.
The sad pension situation was further made open when the MD of Norrenberger Pensions Limited lamented that only about 10% of Nigerians have access to pension schemes and that 80% of Nigerian retirees depend solely on their monthly pension for survival.
PenCom's pension recovery objective
According to This Day, the process of recuperating overdue pension contributions commenced in June 2012 through the appointment of Recovery Agents (RAs).
As of September 2023, PenCom oversees the activities of 28 RAs engaged in this initiative.
The objectives of this recovery effort encompass various goals, such as recovering pension contributions that were not remitted, including associated penalties.
It also seeks to safeguard the financial interests of affected employees by addressing investment delays, improving organizational adherence to the Pension Reform Act of 2014 (PRA 2014), and reducing employee complaints about non-remittance of pension contributions.
Ultimately, these efforts aim to foster trust and acceptance of the Contributory Pension Scheme (CPS).
PenCom and PFAs shoulder expenses on recovery efforts
PenCom emphasizes that the recovered principal contributions and associated penalties are placed into employees' Retirement Savings Accounts (RSAs) to make up for the investment income that would have been earned if there hadn't been delays in employer remittances.
Both PenCom and Pension Fund Administrators (PFAs) shoulder the expenses related to the recovery process, ensuring that it remains cost-free for RSA holders.
The ongoing efforts to recover pension contributions have been highly successful, with notable accomplishments in reclaiming both the primary contributions and the accompanying penalties from employers who were not in compliance with their obligations.
Southeast pensioners lament non-payment of pension by state governors
In related news, Legit.ng earlier reported that several pensioners residing in different states within the southeastern region made a plea to the Federal Government of Nigeria, urging them to compel the governors to settle all the overdue pension arrears.
These pensioners have accused the governors of the southeastern states of neglecting their pension obligations for several months without any visible plans to address the outstanding payments.
This was communicated in a statement issued through Anthony Ugozor, the Chairman of the National Union of Pensioners in Anambra State.
Source: Legit.ng
