Employers withhold deductions for pension scheme
By Prisca Egede
MANY companies in the country are currently shortchanging their employees over the contributory pension scheme, the Nigeria Social Insurance Trust Fund (NSITF), The Guardian has learnt.
The NSITF Act 1994 provides for the deduction of three and a half per cent of workers' salaries at source by their employers.
Another seven and a half per cent is thereafter to be added by the employers to raise each worker's account to 12 per cent, payable on retirement.
The Guardian has, however, learnt that neither the deductions from the workers' salaries, nor the employers' contributions are being remitted to the NSITF by many companies.
The NSITF is considering legal actions against the defaulting companies and has already set up a task force to ensure that those perpetrating the act are brought to book. The task force is headed by the Fund's Head of Compliance, Alhaji Danladi Magaji.
On the whole, a total of N917,277,841.05 is yet to be remitted to the NSITF by employers across the country.
Employees in the Food, Beverages and Tobacco industry top the chart, with an outstanding amount of N161,372,584.84. This is followed closely by the Civil Engineering, Construction Furniture and Wood sector, with N113,844,739.89.
The next is the Textile Workers Union, whose members are owing N100,053,584.92. Employers in the banking and insurance sector are yet to remit N60,140,309.10, while those of the Petroleum and Natural Gas Workers Association of Nigeria (PENGASSAN) owe N24,051,154.83.
In the Printing, Publishing and Paper Products sector, employers are yet to remit N52,036,784.20, while the Agriculture and Allied Workers employers are owing N99,692,352.68
The NSITF is charged with providing social security for Nigerians in the organised private sector. Its scope also covers operators in the informal sector who are not covered by the government's pension scheme.
Its Managing Director, Alhaji Mohammed Rufai, in an interview with The Guardian, expressed concern that many employers were refusing to remit the deductions despite posting huge yearly profits.
Rufai stated that the task force, which has till the end of August to round off, is to scrutinise thoroughly the books of all the defaulting employers with a view to ensuring transparency and accuracy.
He said: "Most of them have been avoiding showing us their payrolls for proper records of how deductions are arrived at."
Rufai noted that under the new Pension Act, it would spell doom for the workers if the employers were not brought to book. "We are now in an era of defined contributions where pensions are paid to individuals on the basis of how much contributions you have made together with the returns on your investment," he said.
The NSITF boss added: "Workers will only have something substantial if employers remit as and when due unlike in the era of defined benefits where workers were entitled for benefit once they had contributed for a stipulated number of years, no matter how much they contributed."
He said that in line with the new Pension Act, the scheme is expected to credit the accounts of individual workers, so that after the transitional five years they can take their contributions to any registered Pension Fund Administrator (PFA) of their choice.
"This is why we are intensifying efforts to make sure that everybody whose money has been deducted by employers is remitted and backed up with proper documentation so that workers can have easy access to their accounts," he added.
Rufai declared that the NSITF had lived to its responsibility of paying pension as and when due to all qualified contributors. He disclosed the only ground on which a qualified contributor might not get paid was if the employer defaulted in remitting contributions to the NSITF. This, he disclosed, is the reason for the launching of a new offensive against the defaulting employers "so that tomorrow, these workers will not be stranded."
