A lot of times some employers of labour in the private sector take advantage of the system to short-change their employees by not remitting their monthly pension contributions. There have been complains of non-remittance of pension contribution by some employers even though some of them have deducted these amounts from the employees’ monthly salary. The National Pension Commission has issued a stern warning to employers who engage in such act and have stepped up efforts to penalize those caught in the unwholly practice.
These categories of employers fall into two :
Category A: An employer who deducts employee’s portion of the pension contribution but fails to remit same to the employee’s PFA.
Category B: An employer who fails to deduct monthly pension contribution of his employees completely.
For category A employer, it is worthy to state that such employer would be made to pay not only the deducted employees monthly contribution but interest penalty thereon accruing from the date the contribution remittance was due.
The National Pension Commission (PenCom) or its agents has the right to audit any employer as far back as 2004 when the CPS started. In the second quarter of 2019, PenCom in its quarterly report stated that at total of N260.62m which comprises of N151.59m and 109.64m as principal contribution and interest penalty respectively was recovered from defaulting employers PenCom usually recovers umremitted contributions from defaulting employers through its agents called the Recovery agents.
Employers are mandated to remit their employees monthly contribution which comprises of both employer and employee portion of at least 18% (10% employer and 8% employee) not later than 7 working days after the date salary was paid.
For category B employer who fails to deduct monthly pension contributions of his employees, such employer would need to show that his employment does not mandate a compulsory participation in the CPS before he or she will not be held liable. Otherwise, it is worthy to remind us that under the CPS, an employer with 15 or more employees is mandated to participate in the new pension scheme which is the Contributory Pension Scheme (CPS) according to the PRA.
However, if the employer employs less than 15 workers, such employer is not mandated to participate in the CPS but it can join. In fact, there is now a guideline for those that employ less than 3 employees to participate in the CPS via the Micro pension plan.
The stakeholders in the pension industry most especially PenCom should sensitize employers who are ordinarily not mandated to participate in the CPS on the benefits of participation which include issuance of PenCom certificate of compliance, improved workers welfare and tax incentives among others.
What to do as an Employee
As an employee, it might be difficult to challenge your employer directly especially when you are still in that particular employment. However, what you can do is to talk to your PFA on how to go about this. The PFAs usually have procedures they follow in guiding their registered clients on how to get unremitted contributions from erring employers. In addition to this, the employee can also write to PenCom directly via email address (firstname.lastname@example.org) or contact PenCom through their social media platform (e.g. Twitter: @PenComNig ) explaining his or her ordeal. This will surely be treated.
There are so many employers who deduct monthly pension contributions from their employees but still fail to remit such to the PFAs. This act is not only fraudulent but wicked. PenCom has been trying to reach out to erring employers to pay both the contribution and penalty interest on such contributions.
This is a welcome development and we would enjoin PenCom to step up their act in this regard by also educating both employers and employees on the benefits and dangers of not remitting deducted monthly contributions. We therefore enjoin such employers of labour that practice such act to desist from such inhumane and anti-labour practice.