PenCom recovers N25.13bn unremitted pension contributions, penalties from employers

The National Pension Commission (PenCom) says it has recovered N25.13 billion from defaulting employers which comprises of N12.80 billion principal contributions, and N12.33 billion penalties for delayed payments.

The Commission, in a report on Wednesday, said the amounts were recovered between June 2012 and September 2023.

In the report titled “The Pension Reform Act of 2014 (PRA 2014)”, the body noted that the act stipulates that eligible employees must maintain a Retirement Savings Account (RSA) with a Pension Fund Administrator (PFA) of their choosing.

It states that once an RSA is established, the employee must furnish the employer with their RSA Personal Identification Number (PIN) issued by the PFA.

“Subsequently, the employer must deduct the employee’s monthly contributions within seven working days of salary disbursement, comprising eight per cent from the employee and 10 per cent from the employer.

“However, it is essential to note that the 18 per cent total monthly pension contribution represents the minimum, as employers can opt to increase the rate or bear the entire burden on behalf of the employee.

“Under the PRA 2014, an employer who fails to deduct or remit contributions within seven working days is subject to a penalty of not less than two per cent of the total unpaid contributions for each month or part thereof. This penalty is reclaimed as a debt and credited to the employee’s RSA.”

The report added that going by the act, “recovery of outstanding pension contributions started with appointed Recovery Agents (RAs) in June 2012, and as of September 2023, 28 RAs are operating under PenCom’s supervision.”

“This recovery endeavour aims to achieve several objectives, including reclaiming unremitted pension contributions along with penalties, ensuring that affected employees do not suffer income losses from investment delays, enhancing organisations’ compliance with the PRA 2014, and reducing employee complaints regarding non-remittance of pension contributions, thereby bolstering trust and acceptance of the Contributory Pension Scheme (CPS).”

The report further stated that the Commission has empowered its agents to pursue defaulters, adding that they should start the recovery by getting a list of delinquent employers from PenCom.

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