Many workers are faced with the issue of non-remittance of pension contributions by their employers. There are many causes of this problem that require attention.
In this piece, we will be looking at ways to avoid this and also ensure that the proper thing is done by both employer and employee.
In all honesty, it is not the employer that should take the blame every time. This problem of non-remittance is sometimes caused by the employees themselves. Some of the mistakes some employees make include:
- Non-opening of Retirement Savings Account (RSA) into which pension remittance will be made.
- Refusal to update or inform the employer of RSA details on which pension remittance will be made.
- Submission of wrong RSA details to the employer.
- Not notifying the employer of a change in Pension Fund Administrator (PFA) for those who have changed PFAs in the Transfer Window (TW).
These reasons stated above are the major causes of non-remittance of pension contributions by some employers.
Any employee that falls into the category stated above should ensure that such is corrected to enable the employer to remit or continue to remit pension contributions as expected.
Consequently, there are some employers who also deliberately refuse to remit pension contributions for their employees.
These employers are in 2 categories:
- Those who do not deduct and do not remit.
- Those who deduct and do not remit.
1. For employers in the first category, what the employees can do is to:
- Open a Retirement Savings Account with any PFA.
- Make pension contributions by self through the Voluntary Contributions (VC) window. He or she can calculate his portion of Basic, Housing, and Transportation allowances aka BHT (i.e. 8% of BHT) and remit to his PFA bank account. This can be done online without physically visiting the bank.
- Report such employer to the National Pension Commission (PenCom) in writing (email firstname.lastname@example.org) and PenCom will take it up from there.
The idea behind this is to ensure that the employee does not lose the opportunity of making pension contributions while working so as to have more funds contributed at the end of the day into his RSA. In addition, it will help PenCom to trace easily when such an employer is supposed to have been making pension contributions but fails to do so. Those contributions will be paid in arrears by the employer when PenCom steps into the matter for those organizations the CPS is compulsory upon.
However, kindly note that for an organization that has less than 15 employees in number, participation in the Contributory Pension Scheme (CPS) is only encouraged as the (CPS) is compulsorily applicable to those with 15 or more employees as stated in S2(2) of the PRA 2014. Meanwhile, those with less than 3 employees, can participate through the Micro Pension Scheme, which is also not compulsory but voluntary.
2. For employers in the Second category (that is those who deduct and do not remit), what the employee can do is to:
- First, confirm that this is the case by checking your RSA statements from your PFA. Also, check with your payroll or accounting department to clarify if truly what is being deducted on your payslip is not being remitted to the wrong RSA.
- After confirming that truly your pension contributions are not being remitted but deducted, the employee should report such act to PenCom immediately as this is a criminal act by the employer.
- When making such a report, the employee should clearly state what the issues are in writing (email email@example.com). This will be taken up by PenCom.
It is important to note that employers who deduct pension from employees’ salary and fail to remit are contravening the law and will be penalized as such. All the pension contributions so deducted will be paid along with interest penalty in arrears.
It is worthy to note that there are various benefits that come with remitting pension contributions as employers. Some of which include tax benefits of pension remittance, issuance of pension compliance certificate, etc. Employers can read up on benefits they and the business stand to gain from remitting pension contributions of their employees. It helps them and the business in the long run. It is their duty as stipulated under the law.