Employers pay N5.19b penalty for unremitted pension

Employers of labour in the country have paid about N5.19 billion as penalty for falling to remit their employees’ pension contributions to various Retirement Savings Accounts (RSA) across the country.

The amount represented two per cent fine as penalty since 2012 when the Commission’s recovery exercise began till 2016. The Commission, however, added that in the period under review, it has recovered a total of N11.40 billion.

Employers are to remit employees’ contributions not later than seven working days from the day the salary is paid.

In a report published by the Commission, the amount was recovered following the issuance of demand notices to defaulting employers, whose liabilities had been established.

The report read: “The sum of N2.37 billion was recovered in 2016. This brings the total recoveries made by the consultants from inception of the exercise in 2012 to N 11.40 billion.

“Out of this amount, the sum of N6.21billion represented actual unremitted contributions, while N5.19 billion was the penalty charged for non-remittance.

“Some employers remitted the outstanding pension contributions, including the assessed penalty. However, 123 employers that failed to remit the outstanding pension contributions and penalty as established by the consultants are being prosecuted for violating the provisions of the PRA 2014.”

Section 11 subsection (3) of the Pension Reform Act (PRA) 2004 as repealed by the PRA 2014, states that the employer shall deduct at source the monthly contribution of the employee; and not later than 7 working days from the day the employee is paid his salary; remit an amount comprising the employee’s contribution and the employer’s contribution to the Pension Fund Custodian specified by the (PFA) of the employee.

Subsection 4 further states: “Upon receipt of the contributions remitted under subsection (3) (b) of this section, the Pension Fund Custodian shall notify the (PFA), who shall cause to be credited the retirement savings account of the employee for whom the employer had made the payment.

“Subsection 5 states that where an employee fails to open such Retirement Savings Account within a period of six months after assumption of duty, his employer shall, subject to Guidelines issued by the Commission, request a (PFA) to open a nominal retirement savings account of such employee for the remittance of his pension contributions.

“Subsection 6: Any employer, who fails to deduct or remit the contributions within the time stipulated in subsection (3) shall, in addition to making the remittance already due, be liable to a penalty to be stipulated by the Commission. Subsection (7): The penalty referred to in subsection (6) of this section shall not be less than two per cent of the total contribution that remains unpaid for each month or part of each month the default continues and the amount of the penalty shall be recoverable as a debt owed to the employee’s retirement savings account as the case may be.”