The Nation Newspaper

Tag: pension contribution

  • Govt yet to implement 18% pension contribution, says PenCom DG

    Govt yet to implement 18% pension contribution, says PenCom DG

    •N10b increase sought for accrued rights

    The Federal Government is yet to implement the 18 per cent pension contributions as revised by the Pension Reform Act (PRA) 2014, National Pension Commission (PenCom) Director General (DG), Mrs. Chinelo Anohu-Amazu, has said.

    She spoke while defending the Commission’s 2017 budget before the National Assembly Joint Committee on Appropriations.

    According to her, N79.1 billion was needed for payment of pension increase for the 79,961 pensioners, who retired under the contributory pension scheme (CPS) from 2004 to 2014.

    On the implementation of the new rate of pension contributions, she said under the defunct PRA 2004, the rate of pension contribution for Federal Government employees was a minimum of 15 per cent of monthly pay. This, she said, is shared into two – 7.5 per cent each to be paid by the employer and the employee.

    These, she said had been reviewed upward by Section 4(1) of the PRA 2014, to a minimum of 10 per cent for the employer and minimum of eight per cent for the employee, thereby making it 18 per cent of an employee’s monthly emolument.

    The DG appealed to the Joint Committee on Appropriations to ensure adequate appropriation under the Federal Government’s recurrent expenditure in order to facilitate the implementation of the new 18 per  cent pension contribution rate.

    On the N79.1 billion required for payment of pension increase, she noted that it was constitutional that there should be periodic review of pensions.

    Mrs Anohu-Amazu said: “I wish to note that under the provisions of Section 173(3) of the Constitution 1999 (as amended) employees of Federal Government treasury-funded ministry, department, agencies (MDAs) have the right to periodic pension review. Following the Federal Government’s approval and payment of 15 per cent upward review of pension to pensioners under the defunct Defined Benefit (DB) Scheme, retirees under the CPS are also agitating for the implementation of same in line with their rights under the 1999 Constitution.

    “In compliance with Section 39(3) of the PRA 2014, the Commission engaged the firm of Alexander Forbes Consulting Actuaries Limited to determine the financial implication of the 15 per cent salary review in 2007 on the pension components of the defined benefits rights also referred to as accrued rights.

    “Consequently, the sum of N79.1 billion was determined as pension increase for the 79,961 employees, who retired under the DB Scheme from 2004 to 2014. The computation for the pension increases of FGN employees who retired in 2015, 2016 and those that were scheduled to retire in 2017 would be forwarded for inclusion in subsequent appropriations after due actuarial valuation is concluded.”

  • Fed Govt remits N13.2b pension contribution

    Fed Govt remits N13.2b pension contribution

    The Federal Government has released N10.3 billion for payment of pension contributions to pensioners, who retired in November and December 2015, The Nation has gathered.

    The government also released N2.9 billion to be paid to other batches of retirees, bringing the  amount released to N13.2 billion.

    Consequently, the Central Bank of Nigeria (CBN) has paid the monies to Pension Fund Administrators (PFAs), who have commenced payment to retirees some of who confirmed the receipt of such payments to The Nation.

    Findings have shown that the last Federal Government retirees  to receive pension after retirement were those who retired in October 2015.

    This is because retirement benefits payment, which is the last stage of the Contributory Pension Scheme (CPS), has witnessed some setbacks in recent times due to Federal Government’s inability to remit pension contributions and pay accrued rights.

    Head of Benefits and Insurance Department, National Pension Commission (PenCom), Lana Loyinmi, affirmed that payments were being made to the retirees.

    Loyinmi, however, said the Commission was working with the government agencies that are the direct employers of workers to ensure that more funds are released for payment of accrued pension.

    He said: “We are liasing with the government and engaging agencies that are direct employers of these retirees. Retirees from the private sector on the other hand do not have a problem with receiving their pension.

    “Part of the challenges of the scheme has been delayed remittance of accrued pension right by federal government in recent times.”

    He noted that the way forward is continued engagement of relevant agencies for the release of outstanding accrued rights while steps are taken to alleviate the waiting of retirees before the release of accrued rights.

    “Under the institutional framework of the CPS, the employer is mandated to contribute 10 per cent while employee contributes eight per cent of employee’s annual emolument into the Retirement Savings Account (RSAs),” he added.

    Interim Association of Contributory Pension Scheme Pensioners President, Comrade Matthew Shittu, confirmed that PFAs have started paying their pensions.

    He appealed to PenCom  to continue to prevail on the government to pay retirees under the CPS their retirement benefits while they are still alive.

    He said if the government had released funds for November and December 2015 retirees, it should also release funds for last year’s retirees too.

  • Employers’ll pay 2% penalty fee on pension contribution default

    Employers’ll pay 2% penalty fee on pension contribution default

    Employers will pay two per cent penalty on non-remittance of the contribution as and when due, Director-General, National Pension Commission has said.

    The DG who made this known while speaking in Abuja, said this is in accordance to Section 11(6) & (7) and Section 24(d) of the Pension Reform Act (PRA), 2014.

    She said: “Non-remittance of the contribution as and when due attracts penalty to be stipulated by the Commission as enshrined under Section 11(6)&(7) and Section 24(d) of the PRA 2014.

    “The penalty shall not be less than two per cent of the unpaid contribution and is recoverable as a debt. Specifically, the Act made the remittance of contributions of employees of the Federal Government as a charge on the Consolidated Revenue Fund of the Federation with a mandate on the Accountant General of the Federation to make the appropriate deductions.”

    She stressed that Section 18(a) of the PRA, 2014 gives the Commission the power to enforce and administer the provisions of the Act.

    “This statutory provision also empowers the Commission to co-ordinate and enforce all other laws on pension and retirement benefits while ensuring the effective administration of pension matters.

    “The functions of the Commission under Section 23 of the PRA 2014 include the maintenance of data bank on pension matters and investigation and mitigation of complaints. Section 24(g) thereof further gives the Commission the powers to impose administrative or civil sanctions or fines on erring employers or operators.

    “The PRA also confer the right to request information from any employer on the pension matters. The combined effect of these sections grants the Commission powers to ensure compliance with the PRA under which the CPS was established”, she said.

  • Lagos remits N67b pension contribution in 10 years

    Lagos remits N67b pension contribution in 10 years

    The Lagos State Government has paid total pension contributions of N64 billion from April 2007 to March 2016 into its active employees Retirement Savings Account (RSA) managed by the 10 Pension Fund Administrators (PFAs) approved by the State, Director-General, Lagos State Pension Commission (LASPEC), Folashade Onanuga has said

    She made this known at the 10th Retirement Benefit Documentation Seminar for employees who are due to retire from the Lagos State Public Service between July and December this tear.

    She said that to date, on a total number of 10,334 retirees, accrued pension rights of about N48 billion has been paid by the state government.

    She also said that the state government’s funding of employees’ pension rights under the contributory pension scheme is approximately N112 billion, adding that from August, 2015 to April, 2016, the sum of N13.7 billion naira was paid to 3,069 retirees.

    She further stated that the commission is set to pay another batch of retirees this month.

    She noted that the commission ensures that all accrued pension rights in terms of entitlements for years spent in service before the commencement of the CPS are credited into the RSA accounts.

    While reminding soon-to-be retired employees that their service is drawing to a close, she said their comfort out of service is premised on their taking some steps to guarantee prompt release of their terminal entitlements.

    She stated that the programme is designed to further enlighten participants on the best way to prepare for their retirement and ensure quick access of their terminal benefits.

    She stressed that early processing of their accrued pension rights by employees of PFAs depends on how early they begin documentation.

  • PenCom recovers N10b pension contribution

    PenCom recovers N10b pension contribution

    •Commission to audit firms

    The National Pension Commission (PenCom) has recovered over N10 billion unremitted pension contributions in principal and interest penalty, The Nation has learnt.

    It was also learnt that the Commission would soon begin pension audit of the books of over 200,000 existing employers in the country to determine those who failed to remit the mandatory 18 per cent pension contributions of workers to their Retirement Savings Account held by their respective Pension Fund Administrators (PFAs).

    Section 3 subsection (1) of the Pension Reform Act (PRA) 2014 states that there is  an established law for any employer in the Federal Republic of Nigeria, to have a Contributory Pension Scheme (CPS) for payment of retirement benefits of employees to whom the scheme applies under the Act.

    Section 4 subsection (1) states that the contribution for any employee shall be a minimum of 10 per cent by the employer and a minimum of eight per cent by the employee.

    Section 11 subsection (1) states that every employee shall maintain a Retirement Savings Account (RSA) in his name with any PFA of his choice.

    Subsection (3) states that the employer shall deduct at source the monthly contribution of the employee; and not later than seven working days from the day the employee is paid his salary; remit an amount comprising the employee’s contribution and the employer’s contribution to the Pension Fund Custodian specified by the PFA of the employee.

    PenCom Head, Compliance and Enforcement, Alhaji Umar in an interview with The Nation, said the commission decided to set up the pension audit system to complement its ongoing processes of ensuring compliance by employers in the country.

    The processes according to him, include engaging employers through warning letters, imposing two per cent monetary penalty on unremitted contributions, naming and shaming of erring employers and seeking litigation against them.

    Umar disclosed that the commission will engage accountants and other professionals who have worked in regulatory or banking sector to carry out pension audit on the books of organisations.

    This, he said, will be done on a frequency of three to four years.  He said: “We are still following through our process of compliance starting from engaging employers through warning letters, imposing two per cent monetary penalty on unremitted contributions, naming and shaming of erring employers and seeking litigation against them. This is the process we follow for any employer we find not to be complying with the provision of the Pension Reform Act. The Act provides for a two per cent increase penalty for late remittance.

    “Part of our processes of enforcing compliance is the appointment of recovery agents to recover unremitted pension contribution from the private sector. The agents mostly lawyers and accountants do a pension review of employer’s compliance level and where they find that they are not complying fully, they determine the outstanding in terms of principal contribution and also penalty as the act provides for. Presently, we are in the process of writing some employers letters. Some are at the level of receiving warning letters, some at the level of imposing monetary penalty while we drag some to the court.

    He added:’’From our database, we have over 200,000 employers and some are portfolio employers. Based on our pension submission framework, PFAs render returns on monthly basis and they tell us who is remitting and who is not remitting contributions. We have consolidated that and we have number of those that are not remitting.

    On the need for pension audit  he said:“Presently, we are planning on pension audit on yearly basis. Auditors will specifically carry out a pension audit on the accounts of companies in terms of pension compliance. Any employer who has not remitted for a period will be identified and will be made to pay the penalty. The numbers are huge and it will take time to go round all of them.

    He spoke about plans to  make the audit frequent saying: “We are planning of making the frequency of the audit to be between three or four years. This is because we are dealing with over 200,000 employers and to audit them every year will be to audit 200,000 companies. This will not be possible because even Nigeria does not have the capacity in terms of available accountants or professionals who have worked in regulatory or banking.

    “Despite these challenge, there is also the issue of cost because you have to pay them to do the work. So we say assuming we audit them in batches per annum on a frequency of three or four years which means that we will come back to each company around this period.

    ‘’We also receive complaint or request to investigate some companies and we invite anti-corruption agencies like the Economic and Financial Crimes Agency, Independent Corrupt Practices Commission and the Code of Conduct Tribunal.

  • Fed Govt owes PFAs N35b pension contribution, says NLC

    The Nigerian Labour Congress (NLC) yesterday accused the Federal Government of contravening the Pension Reforms Act by failing to remit its contributions and deductions from workers’ salaries to the various Pension Fund Administrators (PFAs).

    The workers also took a swipe at the new Group Managing Director, Nigeria National Petroleum Corporation (NNPC) for calling for the removal of subsidy on petroleum products, saying it was unfortunate that the GMD has not read the lips of President Muhammadu Buhari.

    Speaking during the opening of the National Leadership Retreat of the Congress in Calabar, its President, Comrade Ayuba Wabba, said  the government has failed to remit about N35billion contributory pension to the various PFAs.

    He said the Congress has written to President Buhari to direct all affected ministries, agencies (MDAs) and parastatals, to immediately remit these funds without further delay to the PFAs.

    He said: “Comrades would recall that we were persuaded to move away from the defined benefit scheme, which was operational in the entire public service of the federation, to the new contributory scheme, in which the workers also contribute part of their monthly salary to fund the new scheme, because of the unviable funding of the old scheme.

    “Eleven years into the operation of this new scheme, and with last year’s review of the Pension Reform Act, it has only recently come to our attention that even the Federal Government is not keeping to the letters of this contributory pension scheme, as it has so far failed to remit the contributions of both itself as an employer and the deductions from employees salaries – both totalling N35 billion, to the respective PFAs.’’

    He added: “We have written to President Buhari to draw his attention to this illegality, and requested him to direct the affected ministries, agencies and parastatals, to immediately remit these funds without further delay to the respective PFAs.

    “During our last National Executive Council (NEC) meeting in Abuja earlier this month, we received reports about a number of states being in default in the payment and remittances of workers pension deductions, and the mandatory employers’ deductions, which is referred to as matching fund.

    “NEC had already mandated the Congress leadership to mobilise workers to ensure that the arrears of workers’ salaries, allowances and pensions are cleared by the affected state governments. The Federal Government cannot afford to be listed as among the debtor bodies. It has to lead this exercise by sheer force of example.”