Employers must remit pension deductions

Various reports in the media indicate that the plight of pensioners is worsening as a result of non-payment of their due entitlements by both the federal and state governments. The reports detail that many pensioners across the country are owed months of their pension, and in some extreme cases, some pensioners have not been paid […]

Various reports in the media indicate that the plight of pensioners is worsening as a result of non-payment of their due entitlements by both the federal and state governments.

The reports detail that many pensioners across the country are owed months of their pension, and in some extreme cases, some pensioners have not been paid for more than a year now. This situation stems mostly from the fact that deductions made from their salaries as pension were not remitted by their employers as at when due while they were in active service.

Some of the worst defaulters identified in this unwholesome practice are state governments and federal government agencies. Of the 36 states in the federation, only four, Lagos, Kaduna, Edo and Benue, are in up-to-date compliance with pension remittances. By all considerations, this is abysmal and calls for action by the responsible authorities to remedy the situation.

It was found that many employers do not remit pension payments as at when due, and if at all, they are too paltry to cover most of the due entitlements of pensioners. This is the unfortunate situation with most of the pensioners who come under the contributory pension scheme practiced in the country.

When the Pension Reform Act was passed in 2004, it provided for the establishment of the National Pension Commission (PenCom) with a mandate to regulate, supervise and ensure effective administration of pension matters in Nigeria. It replaced the pay-as-you-go scheme which was being administered by the now defunct National Provident Fund (NPF) following the loss of billions of naira belonging to pensioners by the agency.

The Pension Act of 2004 made far reaching provisions in the administration of the pension scheme in the country, prominent of which is the introduction of a contributory pension scheme for employers in the public and private sectors.

As a radical departure from the previous scheme, under the contributory pension system employees are to have a part of their monthly salaries paid into a pension fund with the employers also making their own matching contributions into the same fund.

The noble intention behind this is to ensure that when employees retire after their mandatory years of service, they do so with the expectation that the monies they contributed cumulatively over the period of their service years, as well as the contribution from their employers, will be enough to cater for them in their retirement.

Because pension administration is such a very important and complex matter in the country, the National Assembly has had cause to periodically review and amend the National Pension Reform Act in order to plug in observed lapses in the scheme. Thus the act was amended in 2011 and 2014.

Despite all these changes designed to efficiently manage pension administration and ensure that pensioners get their due, it is unfortunate that the old practice is still with us. Many pensioners in the country are living in penury as a result of non-payment of their entitlements. This development is very bad for the system as many who are still in service could engage in corrupt practices to enable them stash up money for retirement since the pension system is failing. It also puts pressure on the working population, who aside from taking care of their daily needs, have to take up the responsibility of providing for their retired relatives.

The problem lies between former employers who are expected to remit their contributory funds as statutorily required under the act and the Pension Fund Administrators (PFA) which are expected to ensure prompt payment of pension to pensioners. As both do not appear to be alive to their responsibilities, there is an urgent need to compel them to redress the situation.

Accordingly, we call on PenCom, which has the statutory responsibility to act in these circumstances, to look into this issue immediately. The commission should explore the possibility of taking legal action against defaulters in the pension scheme as required under its mandate.

The National Assembly, which passed the pension act and under which purview pension and related matters come, must also wade in and call defaulters to order.

This is also a matter that should be taken up by Civil Society Organisations (CSO) as it concerns the rights and obligations owed to senior citizens who gave their productive years in the service of the country.

The federal and state governments should also take the matter on board. The worsening plight of pensioners must be viewed with all seriousness and concern as it impacts negatively not just on service delivery in the public service but on society as a whole.