The recent revelation by the National Pension Commission (PENCOM) that it recovered N3.94 billion from some private sector organisations which failed to remit the sum to their employees’ Retirement Savings Accounts (RSA) has once again brought to the front burner the penchant of some employers for not remitting their workers’ retirement savings as required by our pension laws.
The commission, in its third quarter report for last year, revealed that it had to adopt a number of recovery measures, which led to cumulative recoveries that amounted to N4.9 billion, comprising principal contributions of N3.94 billion and penalties to the tune of N1.04 billion. Demand notices had to be issued to the defaulting employers whose pension liabilities were established by the agency’s appointed recovery agents.
The report on non-remittance of pension savings by some employers is alarming. It is a development that should worry all workers because the failure to remit these savings and the employers’ contributions to their RSAs as due is a danger to their future because they may not get any retirement benefits whenever they retire.
Any organisation which fails to remit its workers’ pension contributions to their RSAs ought to know that this dereliction places the nation’s pension scheme and the future of the workers in great jeopardy. It is, indeed, a form of economic sabotage.
The haunting images of retired senior citizens forced to live in dehumanising circumstances because of non-payment of their gratuities and pensions are very fresh in our memories. These are men and women who had served the nation and private organisations for many years but were denied their retirement entitlements in their twilight years. Senior citizens deserve their due benefits. Therefore, any attempt by any category of employers in the country to jeopardize the retirement benefits of its workers should be guarded against, resisted and punished.
In this regard, we commend PENCOM for its presence of mind and its diligence which led to the recovery of the unremitted sums. This is a good service in the interest of Nigerian workers. The nation’s pension law is fairly straightforward on the matter of remittance of pensions contributions. The employer is empowered to deduct at source the monthly contribution of the employee and remit it, alongside its own contribution, to the custodian specified by the Pension Fund Administrator, not later than seven working days from the day the employee’s salary is paid. The custodian then credits the employee’s retirement savings account. There is a two per cent fine on any employer who defaults each month on total contributions.
This regulation is mostly observed in the breach. Considering the amount the commission recovered in the third quarter of last year, there is ample evidence that so many organisations are not sending the pensions savings to the custodians as due. It is also clear that the savings are not paid along with the salary as they should. This is probably responsible for the situation in which some employees are unable to get their retirement entitlements, several years after they had stopped working.
The non-remittance of these due sums is not only insensitive, it is wicked, considering its inevitable consequences. It is often a result of the employers diverting the pension contributions to other endeavours, at the detriment of their employees.
We believe the reason for this is that the two percent penalty for non-remittance of the due sums is not deterrent enough. It is a mere slap on the wrist that does not reflect the seriousness of the offence.
We advise that the commission should take a second look at this aspect of the law and send recommendations for stiffer penalties to the National Assembly. It should also devise other effective methods of getting employers to remit the pensions savings at the right time.
We need to emphasize that a healthy pension scheme is an indication of a good economy and all Nigerians who have anything to do with Nigeria’s macroeconomic management should encourage a strong pension scheme. A workforce sure of a secure retirement is likely to be better motivated to work hard and with integrity. Moreover, a strong pension scheme ensures substantial capital savings which, if skillfully invested, can be an engine of economic development.