Pension contribution: Non-compliance by employers worries stakeholders

The poor response by many employers to the mandatory Contributory Pension Scheme is an issue of concern to stakeholders, OKECHUKWU NNODIM writes.

The National Pension Commission, Pension Fund Administrators and employees in various firms have expressed worry over the shoddy response by many employers of labour to the mandatory Contributory Pension Scheme in the country.

Stakeholders at a one-day interactive session organised by the Nigeria Employers' Consultative Association in Lagos on Tuesday, accused many employers of not remitting their workers' monthly contributions to the scheme as stipulated by the Pension Reform Act, 2004.

They wondered why some employers were deducting the recommended percentage from the employees' salaries but failed to remit same to the workers' chosen PFAs.

This, the stakeholders said, was a great disservice to the workers, as it wiped off what should have been their retirement savings.

They said many companies that were contributing to the scheme when it started had stopped doing so, a development they described as counter-productive for the country and detrimental to the employees.

According to the stakeholders, the government must review its enforcement measures and must make contribution binding on corporate organisations, especially private firms.

Speaking at the conference, the Managing Director/Chief Executive Officer, Stanbic IBTC Pensions, Dr. Ademola Sogunle, said many companies had fallen short in fulfilling their obligation to the workers by remitting pension contributions.

He said a lot of companies were not funding their employees' Retirement Savings Accounts, stressing that the workers stood to lose in the long run.

Sogunle said, "Even though we are dealing with the RSA holders (employees) through their employers, we are more in direct contact with the holders. The holders often call us when their funds are not paid, and whenever this happens, the contributor stands to lose.

"It will surprise you to know that some companies last contributed to the CPS two or three years ago. Some of these companies are quoted on the Nigerian Stock Exchange and they are still declaring profits at the expense of those who work tirelessly for them."

He added, "Though there may be some internal, economic or other challenges which some of these companies are facing, but if you drag the remittance of your staff contributions for over two years, then there is a reason to raise the alarm.

"Companies should remit their workers' pension contributions to enable these workers save for their retirement because this is what the law states. This has been a challenge to the PFAs and we are appealing to companies to comply with the Pension Reform Act."

Sogunle said the percentage of citizens complying with the scheme relative to the population of the country was about three, while the coverage figure relative to the working class was about seven per cent.

"This is why we are calling on employers to help the situation, otherwise you will have a situation where many in future will have no savings to fall back on after retirement," he said.

The Director-General, PenCom, Mr. Mohammed Ahmad, said the poor response had been a challenge to the commission, but said it was working assiduously to ensure compliance by employers.

He urged employers in the private sector, especially, to remit their workers' contributions, stressing that the benefits could not be overemphasised.

Ahmad, however, said the commission had taken steps to recover outstanding contributions from defaulting firms.

He said, "The unwillingness of some private sector organisations to join the contributory pension scheme, while others who have joined do not remit the monthly contributions as and when due has remained a challenge.

"To address these challenges, the commission has engaged recovery agents to recover outstanding contributions with interests from defaulting employers in the private sector. The commission will continue with its zero tolerance for non-compliance and consultative approach to supervision in order to promote a stable and sustainable pension industry that will guarantee reasonable income in retirement."

"The commission will review guidelines and regulations to ensure sound corporate governance, adequate protection of pension assets and appropriate response to changes in the environment," he added.

In her reaction, the Director, Operations and Services, TrustFund Pension Plc, Ms. Eno Umoh, urged the regulator to intensify its efforts, noted that defaulters were not helping the nation and were particularly depriving workers of their rights.

She said the problem of non-remittance of contributions had affected the scheme negatively, despite the progresses recorded since it commenced in 2004. Umoh said, "There is no way to quantify the loss, which workers whose employers are not complying with the scheme are suffering. This is a challenge to the PFAs and we urge the government to rise up to this challenge," Umoh said.

The Head, Compliance and Enforcement, PenCom, Mr. Muhammad Umar, outlined the compliance measures adopted by the commission to include public awareness programmes, on-site inspection of companies, collaborations with regulatory/supervisory agencies to enforce the law, application of appropriate sanctions and engagement of consultants to recover outstanding contributions.

"We are addressing these challenges as much as we can, and we hope that very soon, they will become a thing of the past," Umar said.