New Telegraph

PenCom recovers N16.85bn from defaulting employers

Laments lax corporate governance status

Following the failure by some employers to remit workers’ pension contributions to their Pension Fund Administrators (PFAs), the National Pension Commission (PenCom) has so far recovered about N16.85 billion in the past eight years from them. The recovery was achieved through the instrumentality of Recovery Agents established for that purpose. According to the 2019 report released by the Commission, the RAs are required to review the pension records of the employers and recover outstanding pension contributions with penalties. For the year under review, the sum of N1.84 billion was recovered by the RAs.

“This brought the total recoveries made by the RAs, from inception of the exercise in 2012 to December 31, 2019, to N16.85 billion. “This figure represents principal contributions of N8.557 billion and penalties of N8.29 billion. The amounts recovered had since been credited to the respective RSAs of the employees,” the report said.

It further highlighted that a list comprising 69 defaulting employers that failed to remit outstanding pension contributions and penalty as established by the RAs were forwarded for legal actions, adding that in the meantime, the Commission continued to record successes with respect to matters at the courts while many employers had requested for out of court settlements. On the update on implementation of the Contributory Pension Scheme by state government, the report observed that as at December 31, 2019, 25 states had enacted laws on the CPS while seven states were at the bill stage.

Four had, however, embarked on pension reform but chose to adopt the Contributory Defined Benefits Scheme (CDBS) while one con-tinued with the Defined Benefits Scheme. According to the Commission, it also conducted the 2019 Routine Examination of Pension Transitional Arrangement Directorate (PTAD) with copies of the examination reports forwarded to the Honorable Minister of Finance and the Executive Secretary of PTAD. “Similarly, the commission continued to analyse the monthly statutory reports submitted by the Directorate and also monitored the pensioners’ verification and enrollment exercises carried out in the six geopolitical zones and concluded in December 2019.

Specifically, the Commission said it also received and reviewed monthly compliance reports submitted by pension operators with key issues observed from the review of the compliance reports being increase in the value of uncredited pension contributions; delay in the payment of retirement/ death benefits due to incomplete documentation and communication issues; non-procurement of Group Life Insurance Policy for employee’s contrary to the provisions of Section 4(5) of the PRA 2014 and non-remittance of Pay-As-You-Earn (PAYE) taxes in violation of the provisions of Section 81 of the Personal Income Tax Act (PITA). “The Commission had advised the concerned operators to ensure effective resolution of the issues,” it noted.

On risk management, the Commission received the reports submitted by licensed pension operators and thoroughly reviewed the identified risks as well as the associated mitigation techniques after which appropriate feed backs were provided to the relevant operators. On corporate governance, the report noted that all the 32 operators forwarded their corporate governance reports for the year ended December 31, 2019. According to the report, “the commission reviewed the reports and observed some issues, which were not consistent with the code of corporate governance and global best practices.

“These include variance in the responsibilities of the board; non-reporting on the areas of strengths and weaknesses for the board members, board sub-committees and individual directors in the assessment criteria; board committees meetings held the same day whereas some directors had overlapping membership of the board committees; and non-disclosure of membership and quorum for board committees in some board charters.

“Others include non-disclosure of directors’ remunerations; managing directors/ CEOs being members of all board committees and inclusion of executive directors as members of board audit committees; and non-establishment of whistle blowing policies and director’s remuneration policies. Operators concerned had been directed to address the issues and comply with circulars on corporate governance.”

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