The Knowledge Gap And Frequently Asked Questions About The Contributory Pension Scheme (CPS) As A Pilar Of Social Protection Floors: Part 7

By Ivo Takor, mni Esq

Continue from last week

Introduction

We are  concluding the provisions of answers to frequently asked questions on the CPS, with the provisions of answers to some frequently asked questions on compliance with the provisions of the Pension Reform Act (PRA) 2014 and service delivery under the CPS.

COMPLIANCE WITH THE PROVISIONS OF PRA 2014

Compliance with provisions of PRA 2014 is the adherence to provisions of the Act, regulations, circulars and guidelines, issued by the National Pension Commission (PenCom).

How can companies obtain Certificates of Compliance?

A company can obtain certificate of compliance by formally applying to the Commission and attaching the following documents:

(a). Certified list of employees of the organization as

at the end of the last fiscal year.

(b). Certified rates of monthly contributions

indicating the employer (minimum 10%) and

employee (minimum 8%) rates.

(c). Evidence of remittance of pension  contributions for the last three fiscal years for organizations that were in existence for that period; and from the date of incorporation/registration/licensing to the last fiscal year for organizations that were not in existence for the last three fiscal years.

(d). Evidence of transfer of pension fund and assets meant for any pre-2004 retirement benefits scheme into the employees RSA

(e). Evidence of remittance of all outstanding pension contributions and penalties where applicable.

(f). Evidence of valid Group Life Insurance Policy, which should include Certificate of Group Life, Policy Document and evidence of payment.

Can companies with less than 3 employees get Certificates of Compliance?

The PRA 2014 has made compliance with its provisions not mandatory for organizations that employ less than three persons. Therefore, Compliance Certificates are not issued to such organizations. In addition, the PRA 2014 does not require PenCom to issue clearance letters to them.

What penalties does PenCom impose on companies that default in complying with the PRA 2014?

Section 103 of the PRA 2014 provides punishments varying from fines to imprisonment for different offences that may be committed by companies and/or Management of such companies.

What is the penalty on a non-compliant employer that fails to remit deductions as stipulated by the PRA 2014?

Such an employer has committed an offence and is liable to a fine of not more than N250,000.00 or to imprisonment for a term not exceeding one year or to both fine and imprisonment.

What would happen to an employee who fails to open a Retirement Savings Account (RSA)?

When an employee fails to open an RSA within a period of 6 months after assumption of duty, the employer shall request a PFA to open a nominal RSA

for the remittance of the employee’s pension contributions. Thereafter, the contributions will be transferred to the RSA duly registered by the employee.

What would happen to a Pension Fund Administrator (PFA) or Pension Fund Custodian (PFC) that misappropriates pension funds?

A PFA or PFC or any person or body that misappropriates pension funds is liable, on conviction, to a fine of an amount equal to three times the amount misappropriated or imprisonment for a term not less than ten years or to both fine and imprisonment. In addition, PenCom shall remove from office, any Director or Officer of such PFA or PFC who misappropriates the funds.

What happens to a PFA or PFC that fails to render monthly reports of any fraud, forgery or theft occurring in its organization to PenCom?

Such PFA or PFC has committed an offence and shall be liable on conviction to a fine not less than N10m and each of its Directors or Officers responsible for the offence shall be liable to a fine of not less than N5m or imprisonment for a term not exceeding three (3) years or to both fine and imprisonment.

What would happen to a PFA that fails to comply with the provisions of the PRA 2014 on investment and the Regulation on Investment issued by PenCom?

Any PFA who fails to comply with the provisions of the PRA 2014 on investment shall be liable to a penalty of an amount to be determined by PenCom, but in any case, shall not be more than N500,000.00 for each day the non-compliance continues and the PFA shall forfeit the profit from that investment to the beneficiaries of the RSA and if the investment has led to a loss, the PFA shall be made to make up for the loss.

SERVICE DELIVERY UNDER THE CONTRIBUTORY PENSION SCHEME

Service delivery under the CPS, has the ultimate goal to provide easy access to retirement benefits by all retirees as and when due.

Who can I complain to if I have a problem with my PFA or employer?

It is the right of the contributors to complain directly to PenCom about their PFAs or employers on all issues regarding their pension contributions, retirement benefits and administration of their RSAs.

What happens where a contributor, beneficiary or pension operator is dissatisfied with a decision or action taken by PenCom?

Such contributor, beneficiary or operator may refer the matter for arbitration in accordance with the Arbitration and Conciliation Act 2004 or to Investment and Securities Tribunal established under the Investment and Securities Act 1999.

How often do I get RSA Statement from my PFA?

PFAs are mandated by PenCom to issue RSA statements to contributors and retirees at least once every three months. RSA holders are expected to update their details with their PFAs, from time to time, to ensure that they receive the RSA Statements regularly.

How can I monitor my RSA?

The RSA statement has a minimum information and disclosure requirements mandated by PenCom, which include amount contributed from inception to date, monthly employer and employee pension contributions, income earned (returns on Investment), and total RSA balance as at the period. PFAs also send RSA balances via text message. Finally, the RSA holder has the option of checking the performance of his RSA on online and on digital platforms or physically visiting the nearest branch of his/her PFA to obtain hard copy of the RSA statement.

How are monthly deductions of contributions handled when one is either a contract or casual staff whose salary is not broken down into basic, transport and housing allowances?

The PRA 2014 has not categorized workers on permanent or casual basis. Employers are mandated to remit pension contribution of every worker on its payroll. For staff whose salaries are not broken into basic, transport and housing allowances, the pension contributions should be based on the salary payable.

What are the causes of delays in crediting the contributions of employees of Treasury Funded Federal Government of  Nigeria (FGN) Ministries, Departments and Agencies (MDAs) into their RSAs?

The major cause of delay is the incomplete or incorrect information about the contributor due to non-submission of updated Nominal Rolls by MDAs to PenCom. Such vital requisite details include RSA Personal Identification Number (PIN), date of birth, date of first appointment, grade level and step.

What happens when there is difference between the contribution credited to my RSA and what is actually deducted as shown on my pay slip?

Where there is such difference, the employee should approach his PFA and employer for reconciliation. Where it is established that there is an under payment of the monthly contributions, the employer must remit the difference into the RSA of the employee.

What happens to the accrued pension benefits of employees who were hitherto in the services of States and Local Governments, but later transferred their services to the Federal Government after the commencement of the CPS?

The practice of “transfer of service” for the purposes of payment of retirement benefits in the public service of the Federation and FCT has been abolished. Consequently, employees who transferred their services after the commencement of the CPS have the responsibility to arrange with their previous employers to pay their retirement benefits for the periods they served in their employment.

What happens to an employee of a Treasury-Funded MDA whose pension contribution is not being remitted to his/her RSA?

Such an employee should write a complaint to his PFA. He may also inform the Pension Desk Officer (PDO) of his/her organization and provide all necessary documents, as maybe advised by the PFA, for on ward delivery to PenCom. The documents Will be verified and the necessary remittance of his/her accumulated contributions would be made in all verified cases. Where the employee is working for an FGN MDA that is already on IPPIS Platform, such complaint should be forwarded to the Office of the Accountant General of the Federation for verification and remittance of all outstanding contributions.

Conclusion

Today we conclude the provisions of answers to frequently asked questions on the CPS, which was aimed at bridging the knowledge gape on the CPS especially among members of the scheme.