Pension Palaver: Pencom Pushes To Enforce Rule Pen

Twelve years after the contributory pension scheme came into being through pension reform Act of 2004, the scheme is still enjoying low penetration as many public and private organisations are yet to key into it.

But laudable as the new scheme is, only the Federal Government and its agencies have fully keyed into it. Reports said only states of Anambra, Lagos, Delta, Niger, Ogun, Osun, Rivers and Zamfara have braced the odd to migrate their workers into new scheme, from the old one that was full of encumbrances and government interference.

Few days ago, a 75-year old pensioner died at verification centre in Edo State, when he tried to satisfy the pre-condition for his monthly pension entitlement.

While the Federal and some states are remitting their counterpart funding to add to that of workers regularly to the pension administrators, not many employers in the private sector can be said to be doing the same thing.

According to reports, during the first quarter of last year, many states were yet to embrace the new pension scheme, while only a few private organisation keyed into it. Till date, these organisations are chased around by PenCom on behalf of their workers to recover their contributions. With this, there is no doubt that a very bleak future awaits many workers for non-compliance of states and private organisations, which are not likely to key into the scheme any longer because of the lingering revenue crisis.

Some retired workers told The Guardian that until they left their employment, they never knew their contributions were not remitted to their Pension Fund Administrator (PFA).

Gabriel Atuyota worked with a manpower, logistic and car hire company, Swift Nigeria Ltd, which then contracted him to Globstar Engineering Company until recently when he was retired on the grounds of his age.

Narrating his experience, he said, “The company contracted me to Globestar Engineering Company. I registered with Stanbic IBTC as my pension administrator. While I was working, I thought the company, my employer, that contracted me out was remitting its own contribution. It was when I retired that I discovered they did not remit between 2007 and 2009. They were only remitting my own contribution and there is no reason given for that.

Now that I am retired, I don’t know how I am going to recover all their contributions for that period and they even refused to pay my gratuity. I have briefed my lawyer,” he said.

But an Executive Director in the company, Aya Otofanowe in telephone conversation with The Guardian said he was not aware of any issue concerning Atuyota.

He said, “Anybody who has anything can come here. Atuyota has not come here with his complaint. What he told you is not true.” Although he admitted that Atuyota was the company’s retiree, he declined further comment on the allegations against the company by the complainant.

Atuyota is one of many Nigerians who have this problem. They have retired from their various place of work without a reliable pension scheme due to the failure by their employer to key into the scheme or failure to remit deductions to the appropriate pension manger.

This may have accounted for why the scheme now has only 6.74 million contributors and an asset of only N6trn, out of a labour force of 74 million people.

According to reports, ‘‘The total pension contribution by both the public and private sector, into the RSA of employees was N2,953.09b at the end of first quarter of 2015, an increase of N79.87b, representing 2.70 per cent over the total contributions remitted as at the end of December 2015. While the public sector contributed 34.43 per cent of the total contributions, the private sector contributed the remaining balance of 65.57 per cent during the quarter.

‘‘The private sector contributions increased from N1.229.4 77 as at the end of December 2014 to N1,282.14 in the first quarter of 2015, representing an increase of 4.26 per cent. The average monthly contributions by the private and public sectors were N17.46 billion respectively during the quarter.”

A review of the compliance reports forwarded by PFAs to the Commission during the quarter revealed that issues of non-compliance with investment limits by some PFAs; delay in the payment of retirement benefits; receipt of pension contributions without appropriate schedules; unresolved customer complaints; and non-implementation of disaster recovery plans are still weighing down the scheme. Subsequently, the Commission conveyed these issues to the concerned operators as well as monitored them in their efforts at resolving them.

“The commission retained the services of consultants in order to follow-up and conclude work on the recovery of outstanding pension contributions and penalty from defaulting employers. During the quarter, the sum of N549.94m representing principal contributions of N145.85m and penalty of N395.09m was recovered. This brought the total recoveries made to date to N6.73b,” the report revealed.

Worried by the non-remittance of pension contribution, which sources said is in the neighbourhood of several billions of naira, the National Pension Commission (PenCom) has given defaulting firms two weeks to pay up all the outstanding, including accrued interest or face legal action.

The commission, according to an insider, has called on affected organisations to show evidence of remittance, adding that the regulator would not enter into any negotiation with defaulters for amicable settlement.

Sources said the commission had already hired debt recovery agents, made up of lawyers and accountants to help it recover all unremitted contributory pension from private organisations with accrued interest.

‘‘The two weeks deadline we gave to them to pay up all unremitted pension contribution has lapsed and we have engaged law and accounting firms as agents that will help us recover the fund from private organisations with interest. We are not going to negotiate with them and we will not fail to prosecute any of them that shows resistance to pay. As for those that failed to key into the scheme, the law is clear about them. The law says if you have up to three workers, working for you, you must key into the scheme. When we are ready for them, the whole world will know,” he said.

The General Secretary of the Nigerian Labour Congress, Dr. Peter Ozo-Eson, who reacted to the low buy-in of the scheme by employers of labour, said the contributory pension scheme “is established by law and the coverage is defined within the law,” adding that it is now the responsibility of the state to enforce its implementation for compliance, especially when people disobey it.

“When you have a law like this, it is not the trade union’s duty to enforce it. It is criminal not to remit, after collection, to the pension administrators. The PenCom has the duty to sanction erring organisations because that money is supposed to be remitted and invested for it to grow in the interest of the workers. PenCom will need to make example out of some of these organisations,” he said.