One of the major challenges facing the Contributory Pension Scheme, CPS, is the issue of poor remittance by private sector employers. In this interview with the Acting Director-General of the National Pension Commission, PenCom, Mrs. Aisha Dahir-Umar, she gives insight into how the commission is addressing the challenge, among other issues. Excerpts:

The level of remittances by private sector employers has been a major drawback to the CPS. How are you addressing it and what have been achieved and the challenges?

The Commission has developed a Framework for Compliance with the provisions of the Pension Reform Act, PRA, 2014. The Framework outlines the strategies being adopted to drive compliance. The strategies include the appointment of consultants to review the pension records and recover unremitted pension contributions and penalties from defaulting private sector employers. Other strategies are the issuance of Pension Clearance Certificates, Complaints Resolution and Monitoring of Compliance through onsite inspection of employers, Public Awareness, Engagement and Collaboration with social partners and relevant stakeholders.
The implementation of these strategies has improved the level of remittances of pension contributions by the private sector employers. The appointment of Recovery Agents, RAs, to recover unremitted pension contributions plus penalty has been largely successful. It has boosted the confidence of contributors and encouraged non-participating employers to embrace the scheme. Through this initiative, the Commission has recovered N15.53 billion comprising principal contribution N7.99 billion) and penalty (N7.54 billion) from defaulting employers. The penalty is remitted to the employees Retirement Savings Accounts, RSAs, to compensate for the income that would have been earned if the contributions were remitted as and when due.
The Commission issues Pension Clearance Certificates, PCCs, to private sector employers with three or more employees. The PCCs are renewed on yearly basis. Through this initiative, the Commission has ensured the remittance of N124.6 billion from 16,536 private sector organisations who applied for the certificate in 2018.
Furthermore, the Commission drives compliance by private sector employers through public awareness campaigns and engagement. This initiative aims at educating employees/employers and expanding the coverage of the Contributory Pension Scheme. In addition, the Commission monitors compliance through onsite inspections to ensure that employees of private sector organisations open Retirement Savings Accounts, RSAs and pension contributions are remitted as and when due.
Meanwhile, in a bid to ensure compliance with the CPS, the Department had faced challenges. Some of these challenges include: Reluctance of some employers to remit pension deductions due to perceived increased personnel cost; Non or irregular funding of RSAs by private sector employers as a result of weak business environment; Absence of a comprehensive database of private sector employers and their accurate addresses. So far, the Commission has relied mainly on information provided by complainants and returns rendered by operators for data on defaulting employers.
The Commission engages defaulting employers, including media organisations, on non-remittance of pension contributions and penalty in line with its Regime of Sanctions. Furthermore, the Commission had also appointed RAs to review the pension records of employers and determine their level of compliance with the provisions of the PRA 2014.
So far, the Commission has identified and assigned 20 defaulting media organisations to the RAs. To date, the sum of N238.19 million has been recovered from 11 of the media organisations as three of them have fully settled their outstanding pension liabilities while eight made partial remittance of their established pension liability. Furthermore, 12 media organisations (inclusive of some who have made partial remittance) are being prosecuted by the Commission on non-remittance of pension contributions.
In addition, we urge employees in the media sector to report cases of non-remittance of pension contributions to the Commission.

Is he Federal Government up to date with remittance in the core civil service and parastatals?

The pension contributions of permanent employees of the Federal Government of Nigeria under the treasury funded Ministries, Departments and Agencies, MDAs, are deducted regularly at source by Budget Office of the Federation, BOF,/Office of the Accountant-General of the Federation, OAGF, and credited to the Contributory Pension Account at Central Bank of Nigeria. Thereafter, the Commission remits the pension contributions of such employees from the CPA into their respective Retirement Savings Accounts, RSAs, with Pension Fund Administrators, PFAs.
The Federal Government of Nigeria through the BOF has continued to promptly deduct and release pension contributions to the Contributory Pension Account, CPA, domiciled with Central Bank of Nigeria for onward remittance into the employees’ RSAs. In essence, the FGN has been up to date with the remittance of Pension contributions for the core Civil Service and Parastatals.

What is the status of implementation by state governments?

Pursuant to the enactment of the Pension Reform Act, PRA 2014 which mandated the participation of employees of the public service of the Federal Capital Territory, States and Local Governments as well as the private Sector in the contributory Pension Scheme, the National Pension Commission (the Commission) has consistently been engaging various state governments, trade unions, relevant stakeholders and the general public on the full benefits of the CPS with a view to bringing them to full implementation of the scheme.
This pursuit of the Commission is yielding better result as more state governments are inching towards enacting laws to facilitate their full adoption of the CPS. To date, 24 states have enacted Laws on the CPS which are substantially in tandem with the provisions of the PRA 2014 while six other states – Kwara, Benue, Plateau, Cross River, Borno and Akwa-Ibom – have drafted Bills on the CPS and are currently undergoing the legislative processes towards their passage into law. On the other hand, three states – Jigawa, Kano and Adamawa – have embarked on the Contributory Defined Benefits Scheme while Bauchi and Katsina states have also drafted pension reform bills on the CDBS. Yobe State has, however, decided to continue with the Defined Benefits Scheme.
The Pathetic Destiny Of Pensioners In Nigeria
Out of the 24 states with pension laws on the CPS, five states – Lagos, Kaduna, Ondo Edo, Ekiti states, Anambra Local Government and the Federal Capital Territory, FCT, are currently remitting both the employer and employee pension contributions of their employees while four states, namely: Zamfara, Kebbi, Rivers and Anambra remit only employee portions of pension contributions of either the state or local government employees.
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