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  • Writer's pictureDamilola Agubata

How PenCom Ensures Employers Remit Pension Contributions

As a worker in paid employment, receiving a pension is your right. And thanks to the Contributory Pension Scheme (CPS), it is your employer’s duty to remit at least 10% of your monthly emoluments into your Retirement Savings Account (RSA) while you contribute at least 8%.

Now, if your employer fails to remit your contributions into your RSA, then the National Pension Commission (PenCom) steps in with a penalty to ensure that you get your contributions.

Today, we will look at how PenCom ensures that employers do not get away with failing to remit pension contributions into their employees’ Retirement Savings Accounts (RSAs).

In this article, we have:

  • Why is it essential for employers to promptly remit pension contributions?

  • What are the responsibilities of employers under the new Contributory Pension Scheme?

  • How PenCom ensures that employers remit pension contributions

We shall highlight them one after the other.

How PenCom Ensures Employers Remit Pension Contributions. Credit: Oak Pensions Limited
How PenCom Ensures Employers Remit Pension Contributions. Credit: Oak Pensions Limited

Why is it essential for employers to promptly remit pension contributions?

Employers are tasked to commit to the prompt remittance of pension contributions into the RSAs of their employees for the following reasons:

  • To ensure that contributors receive their benefits as and when due

  • To curb the excesses of imprudent individuals

  • To protect the interests of everyone who is a member of the active workforce

  • To create a secure future for workers and employees

What are the responsibilities of employers under the new Contributory Pension Scheme?

Employers play a crucial role in the new pension scheme which was enacted in 2004 and modified in 2014 under the Pension Reform Act (PRA). Below are their responsibilities:

Obtaining an employer code

The primary responsibility of employers is to obtain an employer code from the National Pension Commission (PenCom).

What is the employer code?

The employer code is a unique identifier that effectively tracks and monitors an employer’s pension obligations. With an employer code, organisations show their pledge to transparency and accountability within the pension system. This is because employers who do not have an employer code cannot remit pension contributions to their employees’ RSAs.

What are the requirements to obtain an employer code from PenCom?

To obtain an employer code from PenCom, the employer must fulfil the following requirements:

  1. A company registration certificate issued by the Corporate Affairs Commission (CAC)

  2. A tax identification number (TIN)

  3. Application letter on the company’s official letterhead.

Deducting and remitting pension contributions for employees

This responsibility comes after obtaining an employer code. The regular payment of pension contributions on behalf of their employees is the basic responsibility of employers. The employer is required to deduct the monthly contributions of the employee, not later than seven working days from the day salary is paid, and remit an amount comprising 8% in respect of the employee and 10% employer contribution to the Pension Fund Custodian (PFC) specified by the Pension Fund Administrator (PFA) of the employee.

To maintain the integrity of the CPS, employers must remit pension contributions promptly. Timely remittance not only ensures the smooth functioning of the pension system but also safeguards employees’ trust in their employers.

By fulfilling this obligation diligently, employers contribute to the stability and growth of the pension fund, ultimately benefiting all participants.

Procurement of Group Life Insurance for employees

In line with the CPS, employers must procure a group life insurance policy (GLP) for their employees. This policy serves as a safety net, providing financial protection to employees’ families in the event of their death while in active service.

The insurance policy pays the ‘sum assured’ benefit to the next of kin or dependents of an employee who dies in active service. Specifically, the provisions of the GLP affect employers in the public and private sectors covered under the CPS. Employers must maintain a GLP in favour of each employee covered by the CPS for at least three times their annual total emolument.

Opening nominal RSAs

Retirement Savings Accounts (RSAs) are crucial in that they are unique accounts for every individual who is saving towards retirement. Employers, therefore, play a pivotal role in this regard, enforcing the opening of RSAs on all their employees for the successful remittance of pension contributions.

However, where an employee fails to open a Retirement Savings Account (RSA) within 6 months after the assumption of duty, it becomes the duty of the employer to request a PFA to open a nominal RSA for such employee for the remittance of pension contribution. This is to ensure that all employee’s pension contributions are not disregarded.

How does PenCom ensure that employers remit their employees' pension contributions?

PenCom employs various strategies to ensure that employers remit their employees' pension contributions and here they are:

  • Appointment of recovery agents

  • Issuance of pension clearance certificates

  • Compliance monitoring through onsite inspection of employers

  • Public awareness and engagement

  • Collaboration with social partners and relevant stakeholders

Appointment of recovery agents

Recovery agents appointed by PenCom are firms with requisite competence and integrity. They include Accounting firms, Law firms and or consortiums of Accounting and Law firms. Recovery agents are responsible for:

  1. Serving demand letter to defaulting employers to request for payment of outstanding pension contributions with interest penalty;

  2. Reconciling outstanding pension contributions with employers where necessary;

  3. Computing Interest penalty in line with PRA 2004;

  4. Following up with the defaulting employers to ensure the remittance of outstanding pension contributions and interest penalties;

  5. Obtaining evidence of remittance of outstanding pension contributions with interest penalty to the employees’ RSAs;

  6. Forward the evidence of remittance made by defaulting employers to the Commission;

  7. Institute legal action on recalcitrant employers that failed to remit all outstanding pension contributions with the interest penalty to employees’ RSAs;

  8. Submit progress reports to the Commission of all recoveries made and challenges encountered; and

  9. Perform any other duty that may be specified by the Commission for ensuring compliance with the PRA 2004.

From the onset of the recovery exercise in June 2012 to 31 March 2023, recovery agents have recovered a total of N24.5 billion of unremitted pensions and their penalties.

Issuance of pension clearance certificates

PenCom started the issuance of pension clearance certificates to compliant organizations in 2012. These certificates serve as a confirmation of compliance with the provisions of PRA 2014 by an employer. The Certificate is one of the key requirements for doing business with Federal Government Ministries, Departments and Agencies.

Compliance monitoring through onsite inspection of employers

Through the Risk Management and Analysis System (RMAS), the Commission has continued to monitor the private sector’s compliance with the PRA 2014. The engagements are aimed at ensuring that employees open RSAs and pension contributions (plus penalty) are remitted into the RSAs.

Public awareness and engagement

The Commission has continued to engage in sensitization workshops on the workings of the CPS for the Organized Private Sectors (OPS). In this regard, several interactive sessions have been held with private-sector employers.

The sessions have been very useful in providing a platform for the Commission to enlighten the private sector, address their concerns and fears and obtain useful feedback that would improve compliance.

Collaboration with social partners and relevant stakeholders

PenCom has been engaging and collaborating with Social Partners like the Nigeria Employers’ Consultative Association (NECA), Nigeria Labour Congress (NLC), Trade Union Congress (TUC), Nigerian Union of Pensioners etc. The interactive sessions provide the platforms for the Commission to interact with critical stakeholders in the Organized Private Sector (OPS) on the implementation of the Scheme.

Final note

If your employer is not remitting your pension contributions and does not have a Group Life Insurance Policy for its employees, report to the National Pension Commission.

Oak Pensions is committed to ensuring that your pension contributions are remitted on time to your Retirement Savings Accounts (RSAs) for as long as you are in paid employment.

If you have any questions or concerns about your RSA, please contact the Marketing Manager at 09087448661 or send us an email via


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