Non-remittance of workers’ retirement savings

The Sun

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.