By Ifeanyi Ugwuadu
Owing to worsening remittances of employees’ contributions to their retirement savings account,  National Pension Commission may begin prosecution of companies during the first quarter of this year to improve assets of pension funds.

It was gathered that most PFAs are reporting lower remittances since the Central Bank reforms in the banking industry started.  The situation has been blamed on the massive sack of workers in the banks and other companies funded by bank credits.

The prosecution being planned by Pencom may be targeted at some big companies as deterrent to curtail default or even derailing the entire programme as a result of poor remittances.

However, Penncom is taking time and cautious about taking some companies to court because of the cost implications both to employers and the Commission to avoid a backlash which may increase rate of defaults.

Besides the banks and their ‘significant’ contribution to the entire pension funds, it was learnt that the induced credit crunch in the company have compelled some companies to slice off some part of staff cost in the expenses either by reducing staff or refusing to remit pension contributions.

Either way, pension remittances or contributions is declining, sources say. Another dimension to the non compliance by employers is that a growing number are just ploughing back the deducted staff pension contribution to current expenses without remitting to retirement savings account of employees.  This situation, sources say have put such defaulting employers in such position that they are unable to remit the accumulated funds owing to dwindling fortunes.

Consequently, some pension administrators told Vanguard on condition of anonymity that they may begin to speak out on the dangers that beset the contributory pension scheme at the onset of the banking reforms and its attendant credit squeeze on the economy.

The opinion of some key pension administrators who spoke on condition of anonymity that silence may no longer be golden in the face of threats to the scheme  said something urgent must be done to steer the economy back on track.
According to a CEO of one of the first set of registered PFAs, the situation may spin out of control if the number of companies closing down or retrenching staff is not halted.

Though confirming Pencom position that the public sector, particularly the Federal Government was leading for the first five years of the contribution under the scheme, he disclosed that projections for the next two years was that the over N1trillion contributed in past 5 years would be more than doubled with the active participation of the private sector.

But like other PFAs, he feared that worsening economic situation and job losses will likely cause serious damage to forecasts and expectation of Pencom and players in the pension market.

In the coming weeks, several leading PFAs may begin issuing comments on the adverse effects of downturn in the economy and loss of jobs are having on companies’ compliance to contributory pension scheme.