- PenCom must work with defaulters to ensure they settle their obligations
With the replacement of Nigeria’s Pension Reform Act of 2004 with the new Pension Reform Act that came into effect on July 1, 2014, it was envisaged that the shortcomings associated with the old Act, such as incessant non-payment of employees’ pensions long after their period of service, would become a thing of the past. Under the old pensions’ administration dispensation, long queues of pensioners from both the public and private sectors waiting to collect their entitlements years after retirement were a constant and pitiable sight. Not only did these aged citizens have to endure the pain and torture, many of them either collapsed or even died in the process. Although there has been a marked improvement in the pensions’ administration process, with the introduction of the pensions’ reforms, there are still prevalent problems such as non-funding of employees’ pension accounts by some public and private sector organisations.
A review by the National Pension Commission (PenCom) at the end of the 4th quarter of 2020 showed that many states as well as private companies had failed to fund the Retirement Savings Account (RSA) of no less than 3.5 million workers as required by law. The obvious implication is that the affected workers, on retirement, would have difficulty accessing the pension on which they are expected to depend in their old age after a period of active service.
Other discoveries by PenCom, in its review during the period under consideration, include delays in the payment of accumulated rights to retired employees, erroneous data on schedules accompanying pension remittances, incomplete documentation as regards 5.2 million RSAs, un-credited pension contributions in the Contribution Reconciliation Accounts as well as the Transitional Contributory Funds of the pension operators. The persistence of these problems, despite the far-reaching and widely applauded pensions’ reforms, indicates that there is still more to be done if employees are not to retire into tears and avoidable hardship.
PenCom deserves commendation for carrying out its regulatory functions in accordance with the law, which led to these discoveries. Even more important, however, is the need for the commission to take urgent steps to bring defaulting employers to book, in line with the Pensions Reform Act of 2014. The Act, for instance, empowers the commission to compel defaulting employers to pay the overdue remittances in addition to paying a penalty of two per cent into the employees’ RSA. The penalty is to compensate employees for the income that would have been earned if their pension contributions had been promptly remitted when due.
It is not enough for the commission to mandate all pensions’ operators to resolve all outstanding un-credited contributions and file progress reports at regular intervals as it has reportedly done in this case. Rather, it must give specific timeframes within which defaulting employers must fulfill their obligations to their employees, after which legally stipulated sanctions must be imposed.
It is not unlikely that unforeseen crises associated with the unanticipated coronavirus crisis, as well as the violence attendant on the #EndSARS protests of last year had negatively affected the finance profile of many private and public sector organisations. In that case, the commission should work closely with affected states and private companies to work out an acceptable plan to resume payment of outstanding contributions into their employees’ accounts, especially with the gradual restoration of normalcy. This is to ensure that public and private sector employers do not just seek excuses to avoid meeting pensions’ obligation to their employees.
No compassionate society treats the issue of payment of pensions’ obligations to retired employees with levity as this will have negative implications for the morale of current active workers who may fear that the same experience of negligence and hardship may be their fate after years of active service.
