PenCom boosts pension assets with N4.9bn recovery

The National Pension Commission (PenCom) has swelled the nation’s pension coffers to N5.6 trillion, with an additional N4.9 billion recovered from debtor employers who failed to remit monies deducted from their employees’ salaries, BusinessDay investigations have shown.

 

The breakdown, according to a document seen by BusinessDay, shows that the amount includes the principal contributions of N3.942 billion and penalty of N1.042 billion respectively, raising the nation’s pension purse from N4.6 trillion, to N5.6 trillion.

PenCom  had through its recovery agents appointed late 2013, recovered N884.83 million for the third quarter 2014, representing principal contributions and penalties.

It was further gatered that Chinelo Anohu-Amazu, the commission’s director -general, has pledged to empower the agents for more recoveries, so as to ensure that workers enjoy the full benefits of the mandatory Contributory Pension Scheme, (CPS), which commenced in 2007, following the Pension Reform Act of 2004.

Already, the development is said to be sending jitters down the spines of recalcitrant debtor employers, who are exploring all avenues to fall in line with the provisions of the law, so as to avoid similar sanctions from the commission.

It was further gathered thatletters of warning were issued to about 255 employers who failed to remit outstanding pension contributions.

Wilson Ideva, managing director/CEO, Premium Pensions Limited, said this enforcement exercise would serve as a deterrent to other defaulting employers of labour.

“It is a welcome development because that is a provision in the law and it is unfair that workers salaries would be deducted and not remitted to their pension fund administrators”.

Ideva observed that enforcement is needed to deepen the pension system, and prays that this effort is sustained  to ensure that many Nigerians enjoy the benefits of the Contributory Pension Scheme (CPS). 

In 2013, PenCom appointed 173 recovery agents, including accounting and legal firms, mandating them to go all out and recover outstanding pension contributions.

Based on a review of the returns forwarded by the RAs to the commission, it was established that 15,427 employers failed to remit pension contributions to the administrators, on behalf of their employees. This involved Retirement Savings Accounts (RSAs) for various periods between January 2010 and December 2011. Subsequently, the defaulting employers were distributed among the RAs to recover the outstanding contributions.

As at the end of September 2013, RAs established outstanding pension contributions and interest penalties, amounting to N13.33 billion, against 335 private sector employers. Approval was granted by PenCom for the RAs to serve demand notices to the affected employers, which resulted in the recovery of N335.84 million and an interest penalty of  N31.04 million as at the end of September 2013. 

Section 11(3) of the 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. 

While sub-section (6) further states 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 sub-section (6) of this section 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.