The Contributory Pension Scheme is an excellent scheme that ensures you and your employer contribute towards your retirement. The contributory idea is perfect where the employer deducts your pension contributions at source, add the employer’s contribution, and remits as at when due to your Pension Fund Administrator (PFA).
The Pension Reform Act 2014, makes it mandatory for every employer in the formal sector to 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 Pension Fund Administrator of the employee.
An employer who fails to deduct or remit the contributions within the time stipulated above shall, in addition to making the remittance already due, be liable to a penalty to be stipulated by the Commission. The penalty shall not be less than 2% of the total pension 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.
In addition to the pension contribution the employer is also required to maintain a Group Life Insurance Policy in favour of each employee for a minimum of three (3) times the annual total emolument of the employee and premium shall be paid not later than the date of commencement of the cover.
Where the employer failed, refused or omitted to make payment as and when due for its employees Group Life Insurance as specified above, the employer shall make arrangement to effect the payment of claims (three (3) times the annual total emolument of the employee) arising from the death of any staff in its employment during such period.
If your employer fails to remit your pension contributions to your PFA as at when due and or they dont have Group Life Insurance for their employees, it will greatly affect your chances of being able to access your pension when you retire or affect the chances of your beneficiaries being able to access your entitlements under the Group Life Insurance Policy. Affected Retirement Savings Account holders are advised to report such employers to the National Pension Commission.
From our experience, we advise you write to the Commission, drop the physical letter at any of their offices closet to you, ensure you collect the acknowledged copy and use that to follow up with the Commission to ensure your issue is resolved. See PenCom addresses here.