Non-Remittance of Contributions - PenCom to Sue 101 Firms

Daily Independent

By Sola Alabadan

Due to failure to remit pension contributions on behalf of their employees, the National Pension Commission (PenCom) has concluded arrangements to institute legal proceedings against 101 employers soon.

In the latest report released by PenCom, the Commission informed that it re-appointed 123 Recovery Agents (RAs) in order to conclude the recovery of outstanding pension contributions and penalty from employers.

As a consequence of the demand notices issued to defaulting employers whose liabilities had been determined by the RAs, PenCom confirmed that some employers had remitted their outstanding pension contributions and penalties. "Subsequently, the sum of N367.436 million representing principal contributions and penalties were recovered by the RAs. This brought the total recoveries made so far by the RAs to N4.099 billion comprising of principal contributions of N3.47 billion and penalties of N628.36 million," PenCom noted.

PenCom added that "while letters of warning were issued to 316 employers that failed to remit outstanding pension contributions and penalties that were established by the RAs, 27 employers were referred to the Legal Department for prosecution. This brought the total number of employers scheduled for prosecution to 101."

In spite of the fact that Section 11 (5) (b) of the Pension Reform Act 2004 expressly provides that the employer shall not later than seven days from the day the employee is paid his/her salary, remit an amount comprising the employee's and employer's pension contributions to the custodian specified by the Pension Fund Administrator of the employee, many employers were said to be found wanting in this regard.

To address the issue, PenCom appointed recovery agents, which are mainly Accounting and Law firms engaged by the commission to recover outstanding pension contributions with interest penalty from defaulting employers.

In accordance with Section 11 (7) of the Pension Act, in addition to making the remittance already due, defaulting employers are liable to a penalty not be less than 2 per cent of the total contributions that remains unpaid for each month the default continues. Thus, defaulting employers were made to pay interest penalty of 24 per cent per annum on the outstanding contributions.