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Non-Remittance Of Pension Deductions

The leadership of the Nigeria Labour Congress (NLC) recently disclosed that it had petitioned the Presidency over alleged non-remittance of N35 billion pension funds by various government establishments. The defaulters consists of ministries, departments and agencies (MDAs) at all the three tiers of government.

The NLC President, Ayuba Wabba, who made the disclosure at a workers’ retreat in Calabar, Cross River State, explained that the said amount consisted of deductions from workers’ salaries by the affected agencies but not remitted to the various Pension Fund Administrators (PFAs). This ugly narrative is capable of impacting negatively on the operation of the scheme and consequently threaten the wellbeing of the pensioners.

Wabba did harp on this worrisome trend. It is deeply disturbing that eleven years into the operations of the new pension scheme and with last year’s review of the Pension Reform Act to enhance its effectiveness, we are witnessing default by government establishments. Culprits also exist in the private sector.

Everything legally possible must be done to halt this pervading trend if the scheme would serve its purpose and prevent a relapse to the notoriously corrupt old pension system. The new CPS is a child of circumstance. It was borne out of the need to jettison the former pension system that served as a goldmine to corrupt government officials and their allies.

Under the former system which ugly effect is still being suffered today by many pensioners, custodians of the system helped themselves with the accrued pool of funds as they wished. The amount looted from the system ran into billions of Naira. Cases abound where officials of government and their allies could not account for pension funds they were assigned to administer. Many pensioners found their employment records either incomplete or totally missing on leaving service. Others were to discover that one anomaly or the order existed in their service records that created a hurdle for them to be enlisted for pension or gratuity payment.

In the process of having such anomalies rectified, they are asked to offer bribes or make a deal that would require their parting with substantial part of their benefits when they are paid; or have their records permanently missing. There were also cases of endless identity verification by the MDAs. Pensioners were, and are still being asked, to travel long distance to specific centres to have their identities reauthenticated.

Justification for this repeated exercise which has led to the death, deformation or collapse of the old persons, is based on the fact that many ghost pensioners exist on government payroll. The frequent verification therefore serves the purpose of identifying the ghost pensioners and fishing them out. Incidentally, it is the same government officials that ‘infuse’ the fictitious names into the payrolls and draw the proceeds, including those that had been confirmed dead.

By contrast, the new CPS guarantees efficient service delivery, adequate transparency and unfading confidence. The structure requires employers to remit 15 per cent of an employee’s salary into his or her Retirement Savings RSA with the Pension Fund Administrators (PFAs). The 15 per cent was made up of 7.5 per cent each by the employer and employee).

This was however reviewed upwards in the Pension Reform Act 2014 to 18 per cent (10 per cent by employee; while the employer contributes 8 per cent). The regulatory process involved in the scheme is satisfactory and re-assuring. The activities of the PFAs are strictly supervised by the Pension Fund Custodians (PFCs) with the apex regulatory body, Pension Commission (PenCom), playing umbrella supervisory role. Contributors receive monthly statements of account that allows them track their investment and make necessary enquiries as the need arises.

Additionally, the scheme gives RSA holders freedom to determine how their retirement benefits would be administered. To date, there have been little or no reported cases of infractions or actions bordering on industry aberrations except for the subject of this editorial. This is why feel sad that employers in the public and private sector are sabotaging the system by deducting pension monies from their employees’ salaries without remitting the deductions to the PFAs to credit the employees’ RSAs. That MDAs at the federal level are involved in this criminal act is quite worrisome.

It is an indirect way of introducing a ‘reformed’ version of the corruption and abuse that characterized the old system. We recommend severe sanction for this anomaly. President Muhammadu Buhari has assured that the anomaly would be eradicated soonest, according to Anohu-Amazu. The PenCom DG also disclosed recently that the commission has put machinery in place to go after employers that fail to remit deductions from their workers’ salaries into their RSAs.

According to her, PenCom is working with the Police to ensure the actualization of the plan. She also assured that the Police will work with a department in the commission devoted to enforcement and compliance which, in turn, has engaged recovery agents. We commend the move. With N6.637 million retirement savings account holders today, which is only about 11 per cent of the total working population a lot has to be done to strengthen the system.

We therefore urge Anohu-Amazu and her management team, as well as other industry operators and stakeholders to see to it that no infringement is allowed to attend the scheme such as what the unscrupulous employers are now doing. PenCom should work with the appropriate government agencies to ensure that all the states fully comply with PenCom guidelines. It should also heed the President’s advice to see to it that bottlenecks arising from the transfer of federal workers to the contributory pension system, midway into their career are resolved. This will ensure that the confidence the CPS has generated does not wane.

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