Pension Defaulters Forced To Pay N24 Billion.


Employers who have defaulted in remitting their employees' pensions are now subject to paying fines and penalties exceeding 100% of the unremitted funds.

Organizations, especially those vying for Federal Government contracts, must settle their outstanding unremitted pensions to obtain the National Pension Commission's (PenCom) clearance certificate, enabling them to participate in bidding.

Compliance has become more stringent due to recovery agents appointed by the commission to retrieve unremitted pension contributions and penalties from non-compliant employers. From June 2012 to June 30, 2023, a total of N24.80 billion has been recovered, comprising N12.53 billion in principal contributions and N12.28 billion in penalties.

In the second quarter, the recovery agents collected N268.12 million, including N84.04 billion in principal contributions and N184.09 billion in penalties, from 21 defaulting employers. Additionally, one defaulting employer is facing legal action by PenCom.

The commission issued 16,925 pension clearance certificates (PCCs) in the same quarter, resulting in N57.37 billion being remitted to the Retirement Savings Accounts (RSAs) of 178,324 employees from these organizations.

As per Section 11 (6) of the Pension Act 2014, employers who fail to remit contributions on time will incur penalties stipulated by the commission. These penalties are not less than 2 percent of the total unpaid contribution for each month or part thereof, and they are recoverable as debts owed to the employees' retirement savings accounts.

Aisha Dahir-Umar, PenCom's director-general, urged employers to promptly remit their workers' pension deductions, emphasizing that the Pension Reform Act 2014 mandates contributions to be remitted within seven days of salary payment.

To ensure compliance with the Pension Reform Act 2014 regarding group life insurance and contribution remittances, PenCom advised employees to assert their rights to life insurance policies and pension contributions.

The commission reminded employees that they have the right under section 4(5) of the PRA 2014 to have life insurance policies, and it is essential to ensure timely remittance of pension contributions by employers.

Employers covered by the PRA 2014 must provide copies of insurance certificates with benefit schedules to PenCom, ensuring coverage of employees up to three times their annual total emoluments.

Employers failing to submit insurance certificates by March 31st each year risk being considered in default of Section 4(5) of the Pension Reform Act (PRA) 2014 by the National Pension Commission.

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