PenCom Intensifies Efforts to Recover Unpaid Pensions from Power Sector Firms

The National Pension Commission (PenCom) has escalated its efforts to recover unpaid pension contributions from electricity Generation Companies (GENCOs) and Distribution Companies (DISCOs) across Nigeria. This move aims to ensure compliance with the Pension Reform Act (PRA) 2014 and safeguard the retirement benefits of employees in the power sector.

Unsettled Pension Liabilities in the Power Sector

PenCom has identified that several GENCOs and DISCOs have defaulted on remitting pension contributions for their employees. Despite previous warnings and enforcement actions, these companies have failed to settle their outstanding liabilities, which amount to billions of naira. The non-compliance persists even after the appointment of Recovery Agents to audit and determine the extent of the arrears.

Strategic Collaboration with NERC

To address this issue, PenCom has partnered with the Nigerian Electricity Regulatory Commission (NERC). A joint working group has been established to tackle pension compliance challenges in the power sector. PenCom’s Director General, Ms. Omolola Oloworaran, emphasized the importance of NERC’s role in enforcing pension obligations among power sector firms. She proposed that presenting a valid Pension Clearance Certificate from PenCom should be a prerequisite for obtaining or renewing licenses and regulatory approvals for GENCOs and DISCOs.

NERC’s Chairman, Engr. Sanusi Garba, expressed the commission’s commitment to supporting PenCom in ensuring that power sector companies fulfill their pension obligations. He highlighted the need for a thorough reconciliation of outstanding liabilities and pledged NERC’s assistance in facilitating a sustainable resolution to the issue.

Legal and Regulatory Framework

Under the PRA 2014, employers are mandated to remit pension contributions to employees’ Retirement Savings Accounts (RSAs) within seven days of salary payment. Failure to comply attracts a penalty of at least 2% of the unpaid contributions for each month the default continues. PenCom’s Framework for Recovery of Outstanding Pension Contributions and Interest Penalty outlines procedures for identifying defaulting employers, determining unremitted contributions, and engaging recovery agents to facilitate the recovery process.

Enforcement Measures

PenCom has taken several steps to enforce compliance among defaulting power sector firms:

Deployment of Recovery Agents: PenCom has engaged recovery agents to audit and recover outstanding pension contributions from defaulting employers.
Collaboration with Regulatory Bodies: PenCom has partnered with NERC to leverage its regulatory authority in ensuring pension compliance among GENCOs and DISCOs.
Legal Actions: PenCom has initiated legal proceedings against recalcitrant employers who have failed to remit pension contributions despite repeated notices.
Public Awareness Campaigns: PenCom has conducted campaigns to educate employers and employees about their rights and obligations under the pension scheme.

Implications for Employees and Employers

For employees, the recovery of unpaid pension contributions is crucial for securing their financial future upon retirement. PenCom’s proactive measures aim to ensure that employees’ RSAs reflect accurate and timely contributions, thereby enhancing their retirement benefits.

For employers, particularly those in the power sector, non-compliance with pension obligations can lead to legal sanctions, reputational damage, and loss of regulatory approvals. PenCom’s collaboration with NERC underscores the importance of adhering to pension regulations to maintain operational legitimacy and contribute to the broader goal of social security in Nigeria.

Conclusion

PenCom’s intensified efforts to recover unpaid pension contributions from power sector firms signify a robust approach to enforcing compliance with the Pension Reform Act. Through strategic collaborations, legal actions, and public awareness initiatives, PenCom aims to protect employees’ retirement benefits and promote a culture of accountability among employers in the power sector. The ongoing partnership with NERC is expected to yield positive outcomes in addressing pension compliance challenges and ensuring that employees’ rights are upheld.