Certification: Compelling tool for pension remittance

The need to ensure employers comply with the new Pension Reform Act 2014 has led the industry regulator to device various sanctions, including recent caveat, for defaulters to await its hammers. Sunday Ojeme reports




lobally, employers tend to maximise opportunities that earn them huge profits. While some look for legal loopholes to achieve the target, some others deliberately flout laws including denying their workers lawful benefits to get it done.



The latter is the case of most Nigerian employers, who have continued to flout the Pension Reforms Act 2014 as regards remitting workers’ pension contributions to Pension Fund Administrators (PFAs) as well as providing group insurance cover for their employees.



Although the contravention had gone on for years, recent developments from the National Pension Commission (PenCom) point to the fact that it is no longer going to be business as usual.

For instance, although the commission had taken some steps in the past to compel employers’ compliance, the public notice issued by the regulator last week on confirms that things would improve for better for workers.




In the past, the Commission had deployed issuance of certificate of compliance to faithful employers to make them eligible for Federal Government’s contracts as well using recovery agents to get defaulting employers to remit deducted contributions and the calculated interests.



It had even gone further by threatening to collaborate with capital market regulator to deny state governors, who fail to comply, access to bonds since the pension funds also make up bulk of the financial instrument in the market.



To consolidate on its compliance resolve as far as remittance and group life insurance are concerned, the management of the commission has again issued another circular warning of an impending sanction on employers, who fail in this regard.




As widely reported in the news, PenCom directed employees to report employer that fails to procure the minimum required life insurance policy in their favour not less than three times their annual total emolument and those failing to remit the deducted pension contributions into their Retirement Savings Accounts (RSAs).



In a notice entitled: ‘Re: Compliance with guidelines for life insurance policy for employees and submission of insurance certificate for 2020,’ the Commission said it was the right of all employees in the public service of the federation, Federal Capital Territory and states that have implemented the Contributory Pension Scheme as well as private sector, under Section 4(5) of the PRA 2014 to have life insurance policy taken on their behalf by their employers for an insured amount of not less than three times their annual total emolument.



The Commission added that employees were also required to ensure that all pension contributions deducted from salaries and/or contributed by employers are remitted to the Pension Fund Custodians (PFCs) by the employer not later than seven working days from the date of payment of their salaries.



It further advised employees to bring to its notice, where the employer fails to “submit the evidence of compliance with life insurance policy and place the certificate in a conspicuous place within the organization, adding that in accordance with the provisions of Section 4(5) of the Pension Reform Act (PRA) 2014 and Section 5.5 of the Guidelines for Life Insurance Policy for Employees, employers of labour covered by the PRA 2014 are required to submit copies of the insurance certificates with the schedule of benefits to the National Pension Commission (PenCom).



“The Insurance Certificates shall state that all employees are covered up to an amount not less than three times their respective Annual Total Emoluments (ATE).“Employers that have not yet submitted copies of Insurance Certificates for the current year to the Commission are, therefore, advised to do so before  March 31, 2020, failing which the National Pension Commission would consider such employers in default of Section 4(5) of the Pension Reform Act (PRA) 2014.”

“Please note also that compliance with PRA 2014 is not complete without the Group Life Insurance Policy,”it noted.



Certificate of compliance

Recall that as part of efforts to make Federal Government contract job easier for private firms in the current year, PenCom granted compliance certificate to 192 companies that remitted their workers’ pension contributions to Pension Fund Administrators (PFAs) in 2019.



Among those certified, a construction firm, Setraco Nigeria Limited, with 3,733 remitted the highest contribution amounting to N566.70 million.

According to the details posted on the website of the commission titled “Schedule of Employers issued with Certificate of Compliance with Provisions of the PRA 2014 as at January 7, 2020, only one bank, Union Bank Plc was listed, although the amount remitted was omitted.



Further breakdown also revealed that AIICO Insurance Plc remitted N154.47 million for 291 employees.



According PenCom, Chapel Hill Denham Advisory Limited remitted N156.62 million for 13 employees; Chapel Hill Denham Advisory partners, N33.65 million, for 37 employees and Jully & Partners Insurance brokers, N1.40 million for five employees.



The list also includes Net Global System And Technical Services Limited, N8.56 million; Rabsco Logistics Nigeria Limited, N116,640.00;  Satch-Mo Technology Limited, N116,640.00; Silver Ash Ventures Limited, N118,800.00; Halivax Associates, N123,120.00; Umarsanda Associates, N218,160.00; Doiltz Ltd, N118,800.00;  Oye Abioye Quaye And Co, N219,600.00, and Microlades Technologies Limited, 116,640.00.



Some others are Sepat Pharmaceuticals Ltd, N117,140.00; Ephrathah Streams Services Ltd, N58,320.00; Dainty Iyke Multi Ventures & Resource, N116,640.00; Geomaji Nigeria Limited, N116,640.00, Ace Global Services Limited, N136,080.00, among others.



The commission in 2012 had noted that private sector employers that complied with the provisions of the PRA 2014 were issued annual Certificates of Compliance, and that to be issued with the certificate, employers are required to submit evidence of remitting contributions to the Retirement Savings Accounts (RSA) of their employees as well as show evidence of valid group life insurance policy.



PenCom also made an appeal to ministries, departments and agencies (MDAs) to support the initiative of issuing certificate of compliance to deserving firms, adding that MDAs often times accept spurious evidence of compliance from contractors and being reluctant in ensuring that companies bidding for works fulfilled their obligations relating to pensions as enunciated in the Public Procurement Act 2007.

“All MDAs are required to demand for the compliance certificate as a requirement for transacting any business with a private sector organisation. Appropriate circulars have been issued to all MDAs in that regard.



“Also, the commission monitors advertisements for contract by MDA to ensure that the pre-qualification criteria included evidence of compliance with the PRA 2014. In 2015, 3,620 employers were issued Compliance Certificates.

“The main reason for the low number of requests being the reluctance of MDAs to ensure that companies bidding for works have fulfilled their obligations relating to pensions as enunciated in the Public Procurement Act 2007,” it said.

PenCom posited that methods deployed by MDAs to avoid complying include the exclusion of the pension requirement in the advertisement for contractors and/or acceptance of spurious evidence of compliance from the contractors.

It said that in a bid to address the lapses, it had agreed with the Bureau of Public Procurement (BPP) that only certificates it issued would be the valid evidence of compliance with the Public Procurement Act 2007.

Previous compliance

For 2018 remittance, the commission issued certificates to 353 companies for the same purpose.


Some of the firms were Reynolds Construction Company Limited, which has 3643 employees and contributed N726.43 million; Leadway Assurance Company Limited, with 283 employees, contributed N133.02 million; Ghazi Shipping and Trading Company Limited, has five employees and contributed N3.13 million; AIICO Insurance Plc, has 264 employees, contributed N135.11 million.



Others were Cornerstone Insurance Plc, 204 employees, contributed N132.20 million; Linkage Assurance Plc, 231 employees, contributed N65.50 million; NSIA Insurance Limited, 99 employees, contributed N27.95 million; Solid Trust Insurance Brokers Limited with nine staff and contributed N5.03 million; Risk Analyst Insurance Brokers Limited, has nine employees and contributed N2.42 million; Prorisk Insurance Brokers Limited, has 9 staff, contributed N2.42 million and Image Brokers Limited has 16 employees and contributed N1.51 million.


The commission has also applied various strategies to ensure compliance with the provisions of PRA 2014 including the application of sanctions and collaboration with key stakeholders on public enlightenment campaigns as well as engagement of defaulting employers via pension recovery agents employed to recover unremitted pension contributions.




According to its second quarter 2019 review, the Commission received 6,480 applications for the issuance of compliance certificate out of which 6,433 certificates were issued, while 47 applications were declined due to non-remittance of pension contributions for the appropriate period and/or non-provision of Group Life Insurance Policy for the employees.



The commission said: The sum of N28.96 billion was remitted to 96,308 employees’ RSAs by the 6,433 organisations that were issued with compliance certificates.

“The Commission maintained the services of recovery agents for the recovery of outstanding pension contributions and penalty from defaulting employers. The RAs were mandated to review the pension records of the employers assigned by the commission with a view to recover outstanding pension contributions with penalty.



“During the quarter, demand notices were issued to 37 defaulting employers whose pension liabilities had been established by the RAs, which resulted in the remittance of outstanding pension contributions of N260.62 million, representing principal contributions of N151.59 million and penalty of N109.64 million.



“Accordingly, total recoveries made from inception to date amounted to N16.01 billion, comprising principal contributions of N8.22 billion and penalty N7.79 billion. These amounts have since been credited to the respective RSAs of the employees.”

Last line



As it is, the Commission may have no choice than to demand more authority from government to give it more power of enforcement. This has become necessary as most Nigerian employers find it easy to flout laws that border on improving workers’ welfare. 

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