The
National Pension Commission (PenCom) has said it would no longer
hesitate to take legal actions against companies that flout its orders
on registration of employes for the scheme.
In
a memo, the management of the commission also warned that it would
sanction errant companies that deduct contributions from their staff
but fail to remit such.
Private
sector organisations and other employers where there are five or more
employees are mandated to join the contributory pension scheme by
virtue of the provisions of section 1(2) of the Pension Reform Act 2004
(PRA 2004).
Accordingly,
employees of private sector organisations including firms engaged in
legal, accounting, architecture, pharmaceutical, engineering, and other
similar professional services are required to open Retirement Savings
Account (RSA) with any Pension Fund Administrator for the payment of
their monthly pension contributions, in line with the provision of the
PRA 2004.
“By
this notice, all private sector organisations including firms of
lawyers, accountants, architects, pharmacists, engineers, and similar
professionals operating in Nigeria are required to comply with the
Pension Reform Act 2004 and in particular, the provision of section
11(5) of the Act, which obligates employers of labour to deduct from
source, both the employee and employer portions of pension
contribution, and remit same directly to the pension fund custodian
designated by the employee’s PFA,” the circular stated.
Flouting the regulations
The
commission further added that remittance of such pension contribution
is required to be made “within seven working days from the date of
payment of salary of the employees.”
However,
enquiries show that many private organisations have persistently
flouted the commission’s rules on pension funds administration. While
some companies have not even enrolled their staff on the scheme, some
owe several months and don’t have their employees’ pension fund
accounts up to date.
Seun
Akintade, a consultant in Lagos, said the regulatory body should get
its staff enlightened and trained so that they can efficiently monitor
the organisations and hence be taken seriously.
“PenCom
would have to step up in terms of efficiency and regulatory duties, if
they would be taken seriously. A lot of firms fall short of their
responsibilities in this regard and so it is up for the commission to
do more than issue warnings,” she said.
Recently,
the commission said it would reveal its guidelines on plans to increase
the amount of pension funds that can be invested in the domestic stock
market.
Presently,
pension fund managers are permitted to invest only up to 25.0 per cent
of their assets in equities, 35.0 per cent in the money market, and the
rest in government bonds. The expected increase in the amount of funds
that can be invested in equities would further deepen the capital
market.
However,
apart from improving portfolio yields on pension funds assets, the
regulators need to review existing guidelines with a view to unlocking
long term capital to address Nigeria’s huge infrastructural gaps.
