By Victor Ahiuma-Young
ONE of the major challenges threatening the Contributory Pension Scheme, CPS, introduced in 2005 following the Pension Reforms, PRA, 2004, is non-remittance of deducted contributions by employers.
Speaking to Pension and You, Secretary/Legal Adviser, National Pension Commission, PenCom, Mr Muhammed Sani Muhammed, gave insight into how the commission is addressing the issue.
“This goes to the heart of actually what we do at PenCom. Pension contribution is supposed to be remitted to the retirement savings account of the employees at least seven days after payment of salary. There are situations where you have employers that don’t do that, but the law says if any employer does not do that, such an employer is liable to pay the un-remitted deduction as well as pay some interests on it. What we have done in PenCom is that we have engaged recovery agents and accountants, they know how to compute, and they go and investigate.
They examine the payroll of the employers then determine what has been remitted and what has not and what is outstanding. The recovery agents will make demands; we will push it through the official authority of the commission to ensure that it is done. We have several administrative procedures in ensuring that employers remit. Now if they are unable to do that, then we graduate that effort to the legal process where we file legal action in the National Industrial Court that has exclusive jurisdiction to deal with pension issues.
So that is what we have been doing. Indeed, we have been making a lot of recoveries. What we do is to request employees to inform us on the situation. Sometimes, some of these things don’t get to us early enough but if people can blow the whistle and tell us exactly the situation with them regarding the performance of their employers in terms of contributions’ remittance then we will be able to take it up from there.
We have a framework for whistle- blowing in the pension industry, which is on our website. But in a nutshell, a person does not even need to write his or her name. When we get the information, we will investigate, we will send our examiners, we will determine what is outstanding and we will take it up from there.
Remittances in Media
You see, as a commission, the approach we have taken in terms of enforcement of this remittance is one that ensures that the employer continues to exist. In ensuring compliance with the Pension Reforms Act, we do not seek to close up businesses. We want to assist, and give business owners advice on how best for them to comply with their obligations. What we do is, when we get our information on non-compliance, we send our examiners, we administratively engage each employer to negotiate.
Because if you look at it, it is very hard to deny, maybe if there is anything to deny, it is just about plus or minus. But if you are remitting your deductions, you just give us evidence of your remittances and if you are not, definitely your evidence will not be there. What we will agree with you, we will come up with an arrangement, a payment schedule on what will be easy and how best you will be able to pay. We will encourage employers to clear the principal so that interest will not continue to grow.
Then, we will also spread the payment in such a way that the business continues to exist, and the employee on whose behalf we are acting will also continue to be in employment, receiving salary and also getting his pension as at when due. This constructive engagement is what we do and I assure you that the media also is subject to that. In view of the fact that there is this feeling, we will step up our approach in that area.”