Nigeria Content Online

The
National Pension Commission (PENCOM) is set to take defaulting
employers to court in its bid to force compliance to the National
Pension Scheme.

Muhammed Ahmed, the
commission’s director general, stated this at the one day conference
for directors of licensed pension fund operators held in Lagos
yesterday. He said that the commission was ready to come down hard on
employers that are refusing to remit funds deducted from their
employees.

“As you are aware,
we had issued warning letters, we had imposed sanctions, we had even
advertised their names as a sort of naming and shaming strategy
expecting that they would comply,” he said. “Unfortunately, they have
not done that. So they have to show us why legal action cannot be taken
against them.”

The act

The Pension Reform
Act 2004 which introduced contributory pension scheme in the country
demands that employers should deduct 15 per cent of the salaries of
employees to be remitted to registered pension fund administrators.
Employers contribute 7.5 per cent while employees contribute 7.5 per
cent.

Part two section
five stipulates that the employer shall deduct at source the monthly
contribution of the employee in his employment and not later than seven
working days from the day the employee is paid his salary, remit the
amount to the pension fund custodian specified by the employees’
pension fund administrator.

Mr. Ahmad said the
amount contributed has increased steadily since the scheme started
effectively in 2005. So far, over four million employees are active
participants in the contributory pension scheme, which currently has
over N1.73 trillion in contribution as at April 2010. He put monthly
contributory figure at N20 billion. According to him, the bulk of the
funds are contributed by the over 157,000 private sector employees so
far captured in the scheme. He also revealed that many state and local
governments have yet to sign on to the scheme.

Required legislation

Participants at the
conference lambasted the poor contribution from the public sector.
Joseph Sanusi, chairman, First Pension Fund Custodian called for a
legislation that would compel state and local government to embrace the
scheme.

“Many of them do
not see the immediate benefit,” he said. “They are not taking
responsibility for the past, neither are they ready to take responsible
for the future of their workers.” He added that it is in the interest
of public servants for the states and local government to embrace the
scheme.

The PENCOM Director General said adherence to the investment
guideline, which recommended investment of not more than 25 percent in
the capital market protected contributors’ funds from the capital
market meltdown. He added that the investment guideline is very
conservative in order to guide against any investment failure and that
the pension funds had only about 10 per cent exposure to the Nigerian
capital market.