The Pension Reform Act, 2014 (PRA, 2014) empowers the National Pension Commission (PenCom) to issue Pension Clearance Certificates (PCCs) to organizations fully implementing the Contributory Pension Scheme (CPS).
The PCCs provide evidence for suppliers, contractors or consultants soliciting for any contract or business from any Federal Government Ministries, Departments and Agencies (MDAs) that they complied with the provisions of the PRA 2014, by making remittances of their employee’s contributions as well as securing Group Life Insurance Policy on their behalf too.
Meanwhile, note that the PRA 2014 has made compliance with its provisions not mandatory for organizations that employ less than three persons. Therefore, Pension Clearance Certificates (PCCs) are not issued to such organizations. In addition, the PRA 2014 does not require PenCom to issue clearance letters to them.
A company can obtain certificate of compliance by formally applying to PenCom and attaching certified list of employees of the organization as at the end of the last fiscal year, the certified rates of monthly contributions indicating the employer (minimum 10%) and employee (minimum 8%) rates and 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.
In addition, the organization must also attach evidence of transfer of pension fund and assets meant for any pre-2004 retirement benefits scheme into the employees RSA; evidence of remittance of all outstanding pension contributions and penalties where applicable: and evidence of valid Group Life Insurance Policy, which should include Certificate of Group Life, Policy Document and evidence of payment.
For instance, in the first quarter of 2021, PenCom received a total of 14,741 applications from private sector organizations for the issuance of Pension Clearance certificates (PCCs). Out of this number, PenCom’s data show that PCCs were issued to 9,299 organizations while 5,442 applications were being processed. The records show that a total sum of N41.97 billion was remitted into the Retirement Savings Accounts (RSAs) of 163,286 employees of the 9,299 organization.
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