Operators seek compliance as online pension remittance begins

One of the major challenges of Nigeria’s pension sector today is the uncredited pension made by employers, which makes it difficult for Pension Fund Custodians (PFCs) and Pension Fund Administrators (PFAs) to effectively credit the Retirement Savings Account of employees and also maintain a transparent record of remittances. The challenge has lingered for so long […]

One of the major challenges of Nigeria’s pension sector today is the uncredited pension made by employers, which makes it difficult for Pension Fund Custodians (PFCs) and Pension Fund Administrators (PFAs) to effectively credit the Retirement Savings Account of employees and also maintain a transparent record of remittances.

The challenge has lingered for so long despite ongoing reforms in the pension sector.

This is in addition to non-compliance with pension remittance by many employers in accordance with the Pension Reform Act 2014.

Subsequently, as the challenge lingered, the Pension Fund Operators Association of Nigeria and the National Pension Commission fully migrated pension remittances to digital payment platforms and have subsequently urged employers to comply accordingly.

 

Lingering challenges

Only recently, the National Pension Commission (PenCom) in a report announced the recovery of N28.24bn from defaulting employers since the inception of its recovery initiative in June 2012, as part of its ongoing efforts to enforce compliance with the provisions of the Pension Reform Act.

According to the commission’s Q3 2024 report, seen by Daily Trust, its recoveries include N13.91bn in unremitted pension contributions and N14.33bn in penalties imposed on non-compliant employers.

During the third quarter of 2024 alone, PenCom reported recovering N272.52m from 23 employers. This figure comprises N106.87m in principal contributions and N165.63m in penalties.

The commission also revealed that legal proceedings have been initiated against four employers who failed to comply after repeated engagements.

“To enhance the effectiveness of the recovery exercise, the commission increased the number of Recovery Agents (RAs) from 25 to 41,” the report stated, adding that it had also organised a workshop to train the 16 newly appointed agents to ensure they are well-equipped for enforcement duties.

In the same reporting period, PenCom processed and issued 5,424 Pension Clearance Certificates (PCCs) to private-sector organisations that met the requirements of the Pension Reform Act. The certificates are prerequisites for companies wishing to do business with the federal government.

The commission noted that N24.09bn was remitted into the Retirement Savings Accounts (RSAs) of 69,552 employees as a result of these certifications. However, the number of PCCs issued in Q3 represents a significant 81 per cent decline compared to the 13,047 PCCs issued in Q2 2024.

Only recently, the Director General of the National Pension Commission, Omolola Oloworaran during a courtesy visit to the president of Newspaper Proprietors Association of Nigeria (NPAN) decried the inability of media managers to remit pension for media practitioners, adding that “The findings are very troubling because based on the investigations we’ve done the media houses are owing pension contributions to the tune of 720 million naira. That’s a whole lot,” she said.

 

Online remittance eliminates traditional processes – PenCom

Meanwhile, PenCom noted that the new Online Pension Contribution Remittance System (PCRS), replacing the traditional manual remittance process for employers, was to facilitate seamless pension contribution remittances.

Both parties stated that the new system is designed to enhance efficiency, transparency, and accuracy in pension remittances, ensuring that employees’ Retirement Savings Accounts (RSAs) are credited without delays or discrepancies.

Under the new arrangement, employers can now upload pension contribution schedules and process payments online from their offices or homes, eliminating the need for manual paperwork and physical bank transactions.

Operators had emphasised that the PCRS is free, with no additional costs to employers, and the system is designed to verify employee Personal Identification Numbers (PINs) and Pension Fund Administrators (PFAs) before processing remittances, ensuring accuracy in contributions.

 

Manual process was stunting transparent payments – Operators

Speaking to Daily Trust on the issue, the Chief Executive Officer of the Pension Fund Operators Association of Nigeria, PenOp, Oguche Agudah, noted that the new payment platform will address longstanding issues in pension remittances.

The issues, according to him, include Uncredited RSAs, where pension contributions remain unallocated due to incorrect information, as well as operators receiving payments without clear schedules, leading to reconciliation challenges.

Agudah explained that “Under the new system, pension contributions will go directly into employees’ RSAs with a standardized remittance template and automated validation checks. This will eliminate cases of untraceable remittances, where funds are received but the source remains unclear.

“The introduction of digital pension remittance marks a significant milestone in Nigeria’s pension industry, reinforcing transparency, efficiency, and ease of compliance for employers. By eliminating the manual remittance process, the system is expected to enhance employer participation, improve fund accountability, and protect employees’ retirement savings.

“With the PCRS now fully operational, employers are encouraged to select from the approved service providers and migrate to the digital platform to ensure smooth and accurate pension remittances going forward

“Starting from June 1, 2025, all employers are mandated to remit pension contributions through nine approved Payment Solution Service Providers (PSSPs). All other remittance channels will be blocked to ensure standardised and seamless pension processing. This move marks a significant milestone in Nigeria’s journey toward a transparent, tech-enabled, and accountable pension ecosystem,” he explained.

Providing more insights, Agudah noted that previously, employers manually processed contribution schedules, remitted funds through bank transfers, and sometimes sent incomplete or inaccurate data to Pension Fund Administrators (PFAs). The result? Delays in crediting Retirement Savings Accounts (RSAs) and strenuous reconciliation exercises.

He, however, noted that “Under the new system, PSSPs act as digital gatekeepers. Each platform is directly integrated with PenCom’s database, enabling real-time validation of employee details, such as RSA Personal Identification Numbers (PINs) and assigned PFAs, before payments are made. This ensures that contributions are credited to the right account at the right time.”

He added, “The introduction of PSSPs provides a multitude of benefits to stakeholders in the pension value chain as Real-time RSA PIN validation reduces errors in remittances, just as Employers can upload schedules, make payments and receive instant confirmation on a single dashboard.

“Also, automated reports allow employers, PFAs, and regulators to track contributions in real time, just as standardised reporting formats and digital records, compliance monitoring becomes easier and more enforceable.”

Speaking further, he outlines that all payment platforms will use encrypted payment gateways and follow strict data protection protocols.

Citing an instance, he noted that “Consider a mid-sized company in Abuja with 150 employees. Previously, the HR team spent days generating contribution schedules, sending emails to PFAs, and chasing receipts. When PIN errors occurred, it took weeks to resolve.

“However, since adopting one of the approved Payment Solution Service Providers (PSSPs), the process has become seamless. The platform automatically generates and validates schedules, and the finance team can track payments and generate receipts within minutes. Complaints have dropped to zero, and the HR team now focuses on strategic planning rather than reconciliations.”

 

 9 digital licensed payment platforms approved

Further checks by Daily Trust show that nine digital payment platforms have been approved for the remittance of pension by employers.

The approved platforms include PayPen by Netline Ltd, PayThru by Pethahiah Rehoboth International Ltd, Pension Central by Chams, CyberPay by Cyberspace Ltd, Awabah Remit Services Nigeria, Gemspay Solutions Limited, Uniswitch Technology Limited, Interswitch, and Nigeria Inter-Bank Settlement System (NIBSS.

Pension operators also urged employers to begin onboarding immediately to avoid last-minute hiccups.

Daily Trust reports that the Pension Reform Act, which established the CPS, was enacted to ensure the payment of retirement benefits to employees in both the public and private sectors.

Under the law, every employee is mandated to open a Retirement Savings Account in their name with any PFA of their choice and notify their employer about it.

Employers, according to the law, are required to deduct eight per cent of the worker’s monthly remuneration and add another 10 per cent, making a total of 18 per cent, which should be paid into the employee’s RSA not later than seven days after salaries are paid.