Stories by Victor Ahiuma-Young
Non-academic Staff Union of Educational and Associated Institutions, NASU, has warned that rising cases of non-remittance of deducted funds remains the greatest danger to the survival of the Contributory Pension Scheme, CPS.
Since inception of CPS following the Pension Reform Act, PRA, 2004 as amended, issue of non-remittance has been the greatest challenge facing the scheme.
In a bid to address this problem, National Pension Commission, PenCom, engaged the services of recovery agents to recover non-remitted funds from employers.
NASU position was contained in a motion to the 11th National Delegates Conference of Nigeria Labour Congress, NLC.
The motion was seconded by the Nigeria Union of Pensioners, NUP.
According to NASU, “The 2004 Pension Reform Act, PRA, which was further reviewed in 2014 sought to, among other things, address the chronic under-funding of pension entitlements of workers especially in the public sector.
The introduction of the contributory scheme, which ensured that both employers and employees take collective responsibility for contributing to retirement savings account of workers has added one of the perennial problems associated with payment of pension entitlements of workers.
Though, the continuing lack of clear provision in the new PRA for gratuity, has made employers especially in the private sector, to hold to the false notion that there is no room for gratuity payments by employers under this scheme.
Despite advances which the reforms have brought to our pension administration in this country, some actions, omissions and commission by some government agencies have threatened to undermine the progress that had been made in this sphere. This includes delay and/or non-remittance of deductions from workers’ salaries especially by parastatals and many state governments.
“After ten years of operation, the pension reform act recently underwent some new reform including criminalization and punishment of up to 10 years imprisonment for fraud involving workers’ contributions. The 2014 amendment also marginally increased the contributions of employers to a worker’s RSA from 7.5% to 10%, while that-of employees was increased from 7.5% to 8% of monthly pay.
According to the union, while commending the government for the marginal increment in the contributions to the RSA, as well as taking steps to block identified loopholes in the pension fund administration, NASU however expressed worries that some agencies and employers had “started the unwholesome action of unremitted deductions from workers’ wages, which can easily result in the failure of the scheme over time.”
The union expressed concerns “that the total contribution, especially the employers’ contribution is still far from meeting the expectation of a minimum of 2:1 ratio of employers’ contribution to workers’ contribution.”
It pleaded that the “Congress-in-session mandates the leadership of NLC to gather information from affiliated industrial unions of all employers who have failed to remit deductions they made (plus their own matching up contributions), and forward these information to PenCom for necessary sanctions and compliance.
“NLC should work with the Nigerian Union of Pensioners, NUP, and others in the public and private sector with case of delayed payment of pensions resulting from the old non – contributory scheme, and ensure that Government and other employers involved in unpaid pensions ort out the issues and pay pensions as and when due.
“The leadership of NLC and industrial unions should initiate a new campaign to ensure that government and other employers of labour increase employers’ contribution to RSA of workers to at least twice the contribution of the worker. This effectively means an increase in the existing 10% to 16%.”