FG, states yet to comply with new 18% minimum pension contribution

By ABDUL OLALEKAN

Two years after the 2014 Pension Reforms Act was passed into law, the federal and state governments throughout the federation are yet to abide by some of the provisions in the new pension guideline, including the 18 per cent minimum pension contributions.

Business247 investigation shows that all the 36 states of the federation, including the Federal Capital Territory (FCT) Abuja, are still paying the pension of their workers in the old minimum monthly pension contribution of 15 per cent.

While Lagos State remains the only state that had sent the bill for implementation of the new monthly pension contribution to its State Assembly, other states are yet to consider the new payment status.

The old pension guideline which is the 2004 Pension guideline puts the minimum monthly pension contribution at 14 per cent which should be shared by both an employee and an employer at 7.5 per cent apiece.

However, when the revised pension scheme came on board in 2014, it abolished this provision and put the aggregate monthly pension contribution at 18, a provision most employers, including government, are yet to abide with. While employers, under the new arrangement, are expected to contribute 10 per cent, the remains eight per cent is expected to be contributed by each employee.

Expressing concern, the National Pension Commission (PenCom) said the Federal Government was also yet to commence the implementation of the revised 18 per cent minimum pension contributions for its employees as stipulated under Section 4 of the PRA 2014.

It added that the sum of N79.16 billion has been computed as the arrears of the old 15 per cent pension increase owed to 79,961 Federal Government retirees under the Contributory Pension Scheme (CPS) as at December, 2014.

Meanwhile, PenCom said 73,403 companies have so far embraced the CPS, and that 43,918 of them have largely complied with the provisions of the Pension Reform Act (PRA).

The regulatory body noted that about seven million employees working with public/private sector employers have registered with Pension Fund Administrators (PFAs) for the management of their pension contributions.

“The number of companies whose employees have so far registered is 73,403. Of this number, 43,918 employers with more than three employees have largely complied with the provisions of the PRA.

“The remaining 29,485 with less than three employees are mostly the non-compliant organizations. These categories of employers are usually more of portfolio companies and in some cases are companies that had either been liquidated or ceased to exist,” it said.