BARELY
10 years after it came on stream, Nigeria’s current contributory
pension scheme is already being bogged down in some sharp practices
capable of causing its derailment. Available evidence shows that some
employers are violating certain provisions of the Pension Reform Act
2004 by not remitting workers’ monthly deductions regularly. This trend,
already acknowledged by the National
Pension Commission, the regulatory
agency, has the capacity to condemn the new pension scheme to the same
fate as its discredited predecessors, if not promptly checked.
Consequently, there should be hefty fines for those that fail to comply
with the letter or the spirit of the pension law.
A recent report, citing PenCom’s
records, indicates that over 130,000 registered workers’ contributions
are not regularly remitted. While the number of Retirement Savings
Accounts had risen to 5.55 million by mid-2014, it was discovered that
only 5.42 million were being funded. At some stage, PenCom had to resort
to the services of recovery agents to recover about N3.34bn of such
funds that were deducted but not remitted by employers.
Similarly, staff members of the Nigerian
National Petroleum Corporation called a nationwide strike recently over
the failure of the in-house pension fund managers handling their
contributions to meet up with the payment of a N134bn deficit. After
PenCom had withdrawn its licence, the workers were directed to register
with a registered Pension Fund Administrator. The regulatory body said,
“NNPC has breached this condition (of properly funding the scheme)
considering that the scheme has remained in deficits since 2006.”
Indeed, this is a very worrisome trend.
Since the success of the new pension scheme depends largely on such
remittances, it becomes imperative for the regulator to act so that
retired workers may not end up suffering the same fate that befell
others in the past.
For a system such as Nigeria’s, where
scant regard is ever paid to the lot of the elderly, preparation for
retirement can present a big challenge. Many an old pensioner, after
years of productive and perhaps meritorious service in both the private
and public sectors, has often ended up in long and endless queues,
waiting for entitlements that will never come. For such people, death
often came calling, from exhaustion or infirmities of old age, while
waiting in the queue.
The main problem with the old scheme was
that it was funded by the government; and, like all things under the
supervision of the government, it was subject to massive corruption and
abuse. While the elderly, who are supposed to enjoy their retirement in
peace, are regularly summoned to distant places for the so-called
identity verification, either by checking on their records or using the
biometric system, some individuals are brazenly helping themselves to
billions of naira in pension funds. Even when caught, they still manage
to get away with a slap on the wrist.
It was perhaps to avoid such mess
associated with public pension administration in Nigeria that the PRA
was promulgated to ensure that every retired person, whether in public
or private sector, is paid his or her entitlements. The new scheme is
not only contributory and fully funded, it is also privately managed.
The new pension scheme, amended in 2014,
requires that a minimum of 18 per cent of an employee’s monthly
earnings, made up of eight per cent from the employee and 10 per cent
from his employer, be set aside with a PFA, to be accessed by the worker
upon retirement or loss of employment. The money shall be passed on to
the next of kin if the person dies. It is a laudable scheme indeed.
Unfortunately, some organisations make
the necessary deductions but fail to remit them to the workers’ RSAs.
The law gives PenCom power, as the regulatory body, to make rules as
well as to administer punishment in the event of the rules being
flouted. This is why PenCom should move in and ensure that any
government agency or private firm that fails to play by the rules is
adequately punished.
Since this is something that affects the
lives and survival of individuals at their old age, when they are no
longer able to fend for themselves, PenCom must make sure that those who
fail to remit workers’ deductions are made to face criminal
prosecution. There must be strict enforcement of sanctions and penalties
for non-compliance with the provisions of the law. Labour unions must
closely monitor their members’ pensions. The PRA allows any employee to
lodge complaint to PenCom.
Making an example of one culprit will
surely serve as a deterrent to others. The employer’s legal obligations
to the scheme remain a crucial element in protecting members’ benefits.
