The Federal Government has continued to flout the amended pension law since 2014, Pension Reform Act (PRA), which requires employers to remit 18% of workers’ monthly earnings into RSAs of their workers, investigation has revealed.
The old Pension Reform Act of 2004 mandated workers and employers under the Contributory Pension Scheme (CPS) to each contribute 7.5% of the workers’ monthly emoluments to the workers’ RSAs with their respective Pension Fund Administrators (PFAs). The newly amended PRA 2014 required all CPS employers to increase employers’ minimum pension remittance to 10% while the workers themselves contribute a minimum of 8% raising the total remittance to a minimum of 18%.
Despite the fact that most private-sector employers have complied, the Federal Government has continued to remit the old amount of 15% into workers’ RSAs seven years later. According to Punch, the Managing Director of a Pension Fund Administrator, who spoke on the condition of anonymity, confirmed that the Federal Government had not been remitting 18% of all its employees’ salaries as required by law.
During a recent oversight visit to PenCom by the Senate Committee on Establishment and Public Services, the commission’s Director-General, Aisha Dahir-Umar, hinted that the Federal Government was not complying with the Pension Act.
It was discovered that more workers retired without pensions under the Contributory Pension Scheme because they retired with very low contributions in their Retirement Savings Accounts, which the Pension Fund Administrators returned to them because they could not be placed on payroll, according to findings.
The majority of the retirees had worked for the federal government, but their contributions were either underpaid for seven years or not remitted on a regular basis, according to industry operators who did not want to be named.
Figures obtained from the National Pension Commission’s ‘quarterly report’ on Tuesday revealed that 121,543 retirees had their savings refunded to them because their RSA balance was less than N550,000.
Contributions less than N550,000, according to the law, were deemed insufficient to be divided as monthly emoluments and should thus be returned to the contributors.
Source: The Punch