The National Pension Commission (PenCom) and the Nigeria Labour Congress (NLC), Lagos State Council, have agreed to tackle the persistent non-remittance of pension contributions by employers in both the public and private sectors. They have issued a stern warning that employers’ failure to meet their obligations would no longer be tolerated.
This collaborative effort was disclosed during an interactive session on the Contributory Pension Scheme (CPS) held in Ikeja, Lagos. The CPS, which began in June 2004 under the Pension Reform Act, mandates both employers and employees to make monthly contributions to an individual Retirement Savings Account (RSA) managed by a Pension Fund Administrator (PFA).
The minimum total contribution is set at 18 per cent of the employee’s monthly emolument. Ahmed Lawan, Head of Compliance and Enforcement Department at PenCom, stated that the CPS has significantly transformed pension administration from a mere promise into a funded and enforceable obligation.
He explained that prior to the pension reforms, public sector pensions were largely based on government promises without corresponding funding. In the private sector, pensions and gratuities were often mere book entries, with no guarantee of payment upon retirement. The Pension Reform Act changed this by making it mandatory for employers to remit contributions, thereby protecting workers even if employers cease operations.
Lawan noted that while the previous government had delayed remittances of accrued pension rights, the situation has improved under the current administration, with all outstanding accrued rights now remitted. This ensures that for public sector workers nearing retirement, their accrued pension is already secured in their accounts.
However, Lawan raised concerns over widespread non-remittance among private sector employers. PenCom is adopting a stricter compliance strategy to address this issue, emphasizing that no entity should participate in the Nigerian economic ecosystem without demonstrating commitment to pension contributions for their workers. The total money contributed by Nigerian workers has grown to almost N30 trillion.
PenCom has introduced measures to prevent non-compliant organisations from engaging in government business or pension-related investments. Banks, companies, and investors are now required to show evidence of pension contributions for all their employees, service providers, vendors, and contractors before they can access pension investments.
