Contributory Pension: PenCom Highlights Compliance Requirements for Employers
January 18, 2012
The National Pension Commission (PenCom) has outlined the ingredients of full compliance, insisting that any employer who is yet to fully comply with all the aspects of the law is breaching the Pension Reform Act, 2004.
The Commissioner Inspectorate, Dr. Musa Ibrahim made the position of the commission known in an interview with THISDAY recently.
According to him, an employer under the scheme is expected to deduct pension contributions of their workers, add their own contributions on behalf of such workers and remit these to the workers’ preferred Pension Fund Administrators (PFAs).
In addition, the employer is expected to arrange a group life cover up to three times the annual salary of individual workers before he would be certified to have complied fully with the requirements of contributory pension.
“Full compliance means that an employer has deducted the contributions from an employee’s salary and also added his own contributions to it and has also paid the money into a Retirement Savings Account (RSA) of the employee within 7 days of payment of salary.
“In addition, the employer must have gotten a Group Life Assurance for that employee. Failure to have any of the components will render that person partially compliant or non-compliant,” Ibrahim stated.
The commissioner also outlined the measures that the regulatory body takes to ensure that individual employers comply with the law, saying “when an employer is non-compliant, we have various regimes of sanctions we impose on him.”
Such investigations, according to him, could be carried out by examining the employers books and where necessary, invite him to provide evidence that he has complied with the law before deciding on the appropriate sanctions if he is in breach of the law.
“We first make an enquiry whether he is compliant or not as he gives us evidence of compliance if he claims to be compliant. We can also through our own examinations look at their books, asking them to give us their payrolls, evidence of payment into RSAs or enquiries when somebody alerts us that his employer is not making payment into their RSAs.
“We could also set up enquiry on the employer to give us evidence of compliance too. When that is done, there are specific sanctions we could impose on defaulters. We could either give monthly penalties, or do naming and shaming by publishing the names of non-compliant companies in the dailies and some other things,” the commissioner inspectorate said.
Ibrahim also gave an insight into the projections of the commission, saying the regulatory body was expecting that the number of RSA holders in the country would rise from the present 4.92 million as at November 2011 to over 10 million in the next three years.
“Our projection is that from now to about 2015, we should be able to more than double the 5 million RSA holders that we have registered,” he said
He said nobody was sure what the number of workers in the country was, adding that the commission’s expectation was that the number of workers registered for contributory pension in the country would more than double by the year 2015.
“Nobody can give us the definite number of workers in Nigeria and we also know that there is down sides of business where people’s businesses have gone down and they have laid off workers. However, going by what we have been doing, our projection is that from now to about 2015, we should be able to more than double the 5 million RSA holders that we have registered.
Ibrahim also stated that the commission would soon release fresh guidelines on contributory pension for the informal sector, adding that if the economy improves very soon as projected, the projections on RSA holders would be surpassed..