Pencom and NLC Join Forces to Address Pension Non-Remittance in Lagos
The National Pension Commission (Pencom) and the Nigeria Labor Congress (NLC) have reached a significant agreement to confront the ongoing issue of unpaid pension contributions by employers across both public and private sectors. The two organizations cautioned that any failure to meet these obligations will no longer be tolerated.
This initiative was announced during an interactive session on Contributory Pension Schemes (CPS) held by Pencom in Ikeja, Lagos, with executives from the NLC’s Lagos chapter in attendance.
Overview of the Contributory Pension Scheme
Established in June 2004 under the Pension Reform Act, the CPS provides a systematic framework for retirement, requiring both employers and employees to contribute monthly to an individual retirement savings account (RSA) managed by a Pension Fund Administrator (PFA). The total minimum contribution stands at 18% of an employee’s monthly compensation, with retirement benefits payable mainly upon retirement.
Transforming Pension Administration
During the event, Ahmed Lawan, Head of Compliance and Enforcement at PenCom, emphasized the impact of the CPS on pension administration. Representing Pencom’s Executive Director Omolola Olowolaran, he explained that the reform has shifted pension payments from an unreliable promise to a verified, enforceable obligation. Prior to the reform, public sector pensions relied solely on government promises without concrete funding.
Lawan elaborated that until 2000, pension arrangements were often unreliable. Many government employees worked under the assumption that they would receive a pension after 35 years of service, with no funds set aside to guarantee those payments. Even in the private sector, pensions were often mere entries on a balance sheet, frequently leaving retired employees without the promised support.
The Pension Reform Act has altered this dynamic by mandating that employers remit pension contributions directly to RSAs, ensuring workers’ retirement income is safe, even if their employer ceases operations.
Stricter Compliance Measures Introduced by Pencom
Despite advancements, Pencom officials are growing increasingly concerned about widespread non-compliance among private sector employers. Officials announced the adoption of more stringent compliance measures to address the issue effectively.
“Our compliance strategies will no longer rely on leniency; we will conduct compliance checks to a higher standard,” Lawan stated. “With Nigerian workers’ contributions nearing N30 trillion, participation in our system requires an unwavering commitment to properly contribute to employee pensions.” He noted that entities must demonstrate compliance to engage in government business or receive pension investments.
Lawan also highlighted the importance of verifying that service providers and contractors meet their pension obligations, reinforcing that businesses can no longer turn a blind eye to compliance issues.
NLC Proposes Enforcement Actions Against Defaulters
At the same session, Funmilayo Setsi, Chairman of the NLC Lagos State Chapter, outlined plans for enforcement actions against employers who fail to fulfill their pension responsibilities. She warned that defaulters could face legal consequences and public exposure.
Setsi expressed grave concern over the rising trend of non-remittance by government agencies and private employers. “It is unacceptable that, despite deductions from workers’ salaries, many employers neglect to remit these funds to appropriate pension fund administrators, thus jeopardizing the future of diligent Nigerian workers,” she stated.
Initiatives to Protect Workers’ Rights
Amid increasing complaints from workers, the NLC announced the initiation of surveillance and enforcement operations to protect employees in both public and private sectors. Setsi stressed that the ongoing exploitation and insecurity faced by employees wouldn’t be tolerated, pledging swift action against non-compliant entities.
“The NLC Lagos State House remains committed to ensuring the welfare and rights of all workers are upheld,” she affirmed. At the same time, she conveyed the necessity for all employers to prioritize compliance with pension remittance obligations to promote industrial harmony and social justice.
Formation of a Task Force to Strengthen Enforcement Efforts
As part of the enhanced initiatives, the Lagos NLC will establish a dedicated task force composed of trade union representatives to oversee pension compliance activities throughout the state. This unit aims to facilitate the timely transfer of pension funds to retirees, beginning operations on June 1.
Employers who fail to comply will be publicly identified and face the possibility of legal action. Setsi asserted, “We represent the voice of the workers, and we will do everything in our power to protect their pensions and ensure they can retire with dignity.” She urged all employers to act responsibly in adherence to their pension remittance obligations.
