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The National Pension Commission (PenCom) has expressed growing concerns about the increasing number of uncredited pension contributions meant for employees’ retirement savings accounts (RSAs).
In an announcement made on Friday, PenCom highlighted that the failure of both employees and employers to provide complete documentation has hindered pension fund administrators (PFAs) from successfully crediting RSAs.
PenCom called upon both employers and employees to collaborate in resolving this issue. Employers were urged to ensure they submit comprehensive documentation when remitting pension contributions, and employees were encouraged to open an RSA and furnish their account details to their employers.
PenCom issued a stern warning that noncompliance with this directive by December 31, 2023, could lead to regulatory actions against noncompliant employers, in line with the Pension Regulations Act (PRA) of 2014.
The statement read, “Non-compliance comes with significant implications. PenCom has reiterated that failure to comply with this directive by December 31, 2023, will trigger regulatory actions against non-compliant employers, as stipulated in the PRA 2014.”
Emphasizing the importance of compliance, PenCom stated that its aim is to create a financial safety net for employees during their retirement years, allowing them to enjoy the rewards of their labor without financial worries.
According to PenCom, the PRA 2014 mandates employers to remit the pension contributions of employees who have not established RSAs into nominal RSAs managed by a PFA chosen by the employer.
A nominal RSA, PenCom clarified, is a temporary RSA established for an eligible employee who has not yet selected a PFA to manage their pension funds.
PenCom explained further, “When an employee becomes eligible for pension contributions under the CPS but has not selected a PFA or provided the RSA details to his employer, the employer is still obligated to make contributions on behalf of the employee. As a result, the employer sets up a nominal RSA with a PFA of their choice.”
The commission noted that the nominal RSA functions as a temporary holding account for contributions until the employee provides their RSA information.
Upon completion of the necessary documentation and PFA selection, the accumulated contributions from the nominal RSA are then transferred to the designated RSA managed by the chosen PFA.
PenCom lamented that certain employers have not fulfilled their obligations, leading to far-reaching consequences. Incomplete documentation and the failure to convert nominal RSAs into personalized RSAs have disrupted the seamless and timely crediting of pension contributions, directly affecting contributors’ benefits.
The commission disclosed that a list of affected employers and employees has been published on its website and will be regularly updated. PenCom called for collective efforts to overcome the challenge of uncredited contributions, aiming for a future of secure retirements free from financial uncertainties.
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