Three years after the Pension Reform Act of 2014 mandated public and private sector organizations to increase the minimum pension contribution of both employers and employees to the Retirements Savings Account of workers from 15 percent of the total monthly emolument to 18 percent, the Federal Government has yet to comply with the law.
The PRA 2014 states that employers should increase their contributions to the workers’ RSAs to 10 percent, while the employees’ contribution should rise to eight percent, from the former 7.5 percent each.
Some operators who spoke to our correspondent on the development attributed the non-compliance of the Federal Government to the recession, which has taken its toll on the economy.
They, however, stated that the under payment was to the detriment of the workers because they would have less funds in their RSAs and this would affect the amounts they would be receiving as returns on investment on their accounts with their respective Pension Fund Administrators.
The President, Trade Union Congress of Nigeria, Bobboi Kaigama, said that the labor union have always been on the board of the National Pension Commission and that it was concerned about the under payment into the workers’ RSAs.
He, however, expressed worry that the board of PenCom had not been constituted for a long time, a development he noted was dragging back many decisions that should have been taken.
Kaigama attributed the failure of the government to fulfill its obligation to the workers to the inability of PenCom to play its role due to the failure to constitute its board.
“The board of PenCom should be put constituted as the delay is creating a lot of administrative bottleneck. The moment we get in there, we will find out why those things are not,” he said.
The TUC president also said the union was urging the government to make gratuity compulsory for all retirees in the public sector in order to augment the lump sum they were entitled to at retirement.
He observed that many workers were retiring and getting little amounts as gratuity and monthly pensions under the Contributory Pension Scheme, a situation he noted was not encouraging.
According to him, the government must provide extra funds as gratuity to augment the lump sum that the retirees were getting.
Investigation also revealed that many private sector employers were had to comply with the 18 percent minimum pension savings for workers.
The Chairman, Pension Fund Operators Association of Nigeria, Mr. Eguarehide Longe, said employers must be encouraged to comply with the provisions of the law.
He observed that many people were currently grappling with serious economic challenges in the country, and therefore should not be forced into making extra commitments.
“Paying the 15 percent or pension at all is a real challenge for many employers. If we insist on the 18 percent, we just want to make it more difficult for people who are trying,” he said.