By Victor Ahiuma-Young
RECENTLY, Trusftfund Pensions TFP, Plc, held its annual employers’ forum across the country to keep employers who are their customers abreast with the developments in the pensions industry and get feedbacks from them among others.
In one of the venues of the forum held in Lagos to intimate employers with their duties with regard to their employees as it concerns TFP in terms of their contributions, their remittances, the recent trend in the market or recent developments in the industry, TFP’s Regional Manager, Lagos, Obafemi Arobadi, among others, while acknowledging the serious challenge of remittances by both private and public sectors employers, warned that contributors stand to lose investment income among other benefits for the failure of their employers to remit deducted funds as at when due.
Non-remittances by employers
It has been very challenging, I must confess especially for employers who have not been remitting as at when due, although there are provisions in the law on how to handle such.
One of these is that, when you have an employer who has not been remitting regularly, we are supposed to get the regulator informed about it. But before we do that, we try to find out what is responsible for such because the implication of making an official report, is that it could lead to one or two things for your customers. It could lead to the organisation being sealed up and when such is done, what happens to the workers. They could lose their jobs. What we do in the first instance is to find out if they are deducting and not remitting or they are not deducting at all? The employer could be going through a bad phase in term of having economic challenge. We have seen cases like that and we have equally seen cases where employers pull through and they come back to clear whatever outstanding they had. We also have cases where employers deduct, but refuse to remit and we have a lot of that in the private sector.
So, what we try to do is to identify what the challenges are by having several meetings, doing morasuations by encouraging them on the need to remit the contributions of their workers and theirs.
As a matter of fact, the law says that seven days after salaries are paid, deduction from employees’ salaries and employers’ should be remitted. So, when you have a situation where an employer is not making such remittances for two, three four months and above, we go there to ask why they are not remitting. But when we find a situation where employers seem to be nonchalant, careless and things like that, we inform the National Pension Commission, PenCom, recovery agents to go to such employers to do all that are necessary to recover the debts.
When employers do not pay as at when due, the employees lose what is known as investment income among others. This is why you have employees who start work at the same time, probably on the same level, and probably the same amount is being contributed into their retirement saving accounts, RSAs. One’s deduction is being remitted regularly, the other one is not. The one that gets his contribution remitted regularly gets his investment income as at when due, the other person does. At the end of their working life, you discover that the man who gets his investment income regularly, his account balance will increase while the other will not. The thing is that once your deduction is remitted, it is reinvested. It is not only your money that is been reinvested, everything is put together and reinvested.
So, when your contributions do not come as when it is supposed to come, that means, you will not get the benefits. The investment income comes in a monthly basis depending on the investment. Even the investment that Pension Fund Administrators, PFA, do is monitored by PenCom. Most of those investments are into the Federal Government treasury bills, which to an average investor might not be fantastic in terms of returns, but it guarantees peace of mind.
Employers’ reasons for not remitting
Some of the challenges we have found out over the years are corporate governance issues. How company A runs its business maybe different from how company B runs its business. There are certain expenses that company A may handle very well than company B.
Again, we are so talking about expertise in such organization. We have also found out a situation like care free attitude. It is like a bias towards the scheme. The employer in question feels like paying contribution is like another cost, another overhead or burden for me. That is why PenCom has brought the angle of enforcement through the recovery agents. We have had cases where PenCom had to seal such organizations through the instrumentality of the recovery agents. Sometimes, the commission does the sealing itself.
State governments remitting in accordance with the law
It has also been very challenging for some of our customers who are the state governments because once salaries are not being paid, it is challenging to pay pensions. But when they pay salaries, they pay the backlog. The situation in Lagos is different because Lagos has been consistent in paying. At the last count, we have between 15 and 18 state governments that are doing business with us as Trustfund Pensions Plc.