LAGOS — The National Pension Commission (PenCom) is pushing for companies that employ a minimum of three staff to disclose evidence of compliance with the Contributory Pension Scheme, CPS, as mandated by the Pension Reform Act (PRA) 2014 in their financial statements.
The move became necessary as the task of implementation of the PRA 2004 and later PRA 2014, especially within a developing economy like Nigeria, is a daunting one. About seven million employees working with public/private sector employers have registered with Pension Fund Administrators, PFAs, for the management of their pension contributions. The number of companies whose employees have so far registered is 73,403.
Of this, 43,918 employers with more than three employees have largely complied with the provisions of PRA. The remaining 29,485 with less than three employees are mostly the non-compliant organisations. This category of employers is usually more of portfolio companies, and in some cases, are companies that had either been liquidated or ceased to exist. PenCom said it was working with the Financial Reporting Council, FRC, through a Joint Committee, to include report on compliance with the provisions of the PRA 2014 as part of the disclosure requirements in audited financial statement of all organisations that employ a minimum of three staff. “While the Committee is yet to conclude its work, it is expected that the new International, FIFRS, would include this requirement,” PenCom noted.
Also the Commission said that Ministries, Departments and Agencies, MDAs, of government obstructed full implementation of the CPS by accepting spurious evidence of compliance from contractors seeking government contracts. The MDAs, according to PenCom, are also reluctant to ensure that companies bidding for works fulfilled their obligations relating to pensions as enunciated in the Public Procurement Act 2007. PenCom said that in 2015, 3,620 employers were issued Compliance Certificates and that the low number of requests was due to the reluctance of MDAs to ensure contractors seeking government’s jobs complied with the law as enunciated in the Public Procurement Act 2007.
The Commission noted that with effect from January 2012, private sector employers that complied with the provisions of the PRA 2014 were issued annual Certificates of Compliance, and that to be issued with the certificate, employers were required to submit evidence of remitting contributions to the Retirement Savings Accounts, RSA, of their employees as well as show evidence of valid group life insurance policy.
“All MDAs are required to demand for the Compliance Certificate as a requirement for transacting any business with a private sector organisation. Appropriate circulars have been issued to all MDAs in that regard. “Also, the Commission monitors advertisements for contract by MDAs to ensure that the pre-qualification criteria included evidence of compliance with the PRA 2014. In 2015, 3,620 employers were issued Compliance Certificates.
“The main reason for the low number of requests, is the reluctance of MDAs to ensure that companies bidding for works have fulfilled their obligations relating to pensions as enunciated in the Public Procurement Act 2007,” it said. PenCom posited that methods deployed by MDAs to avoid compliance include the exclusion of the pension requirement in the advertisement for contractors and/or acceptance of spurious evidence of compliance from the contractors. It said that in a bid to address the lapses, it had agreed with the Bureau of Public Procurement, BPP, that henceforth, only Certificates it issued would be the valid evidence of compliance with the Public Procurement Act 2007. Meanwhile, PenCom is putting modalities in place to ensure that the informal sector is included in the CPS.
Director General of PenCom, Mrs. Chinelo Anohu-Amazu, who disclosed this: “We need to empower more people and such persons need to have Retirement Savings Accounts, RSAs. Most people in the informal sector work with their hands and at some point arthritis or some other ailment could set in. At that period, they cannot work as efficiently as they used to do. The tailor is matching all over, sometimes the eyes fail.
The mason will get to a point where he cannot turn out a certain amount of blocks again. By that time, if they have saved nothing, then the liability is on all of us. So these are the very challenging issues surrounding bringing them aboard.
We have to take them into consideration because they have to be protected and they have to have a means of sustenance when they are old and cannot work. “For example, the Nollywod stars at some point will start dwindling in their performances. Only a few of them will act into old age. How many of the bulk of the musicians, actors will perform when they are no longer commanding the kind of fees that they were commanding before. Their lifestyles, at a time, require the glamour associated with their kind of office, so they find themselves living huge lifestyles.
So we need to create a platform where they can set something aside so that when they are not in their prime, they will have something to fall back on. “We have been working on this for the past three years. We have done a lot of studies and what we are looking at now is the technology that will allow everyone, no matter the kind of phone you have or the kind of occupation you are in to be part of it.
The informal sector workers will need a bit more access than those who are in the formal. So, we are trying to work out an acceptable percentage for them. We need to have an idea of how much they earn and how much is their disposable income.The regulation would probably be more than in the formal sector because as they are coming on the system we are also introducing them to the financially inclusive literate world that they were not part of before. So we are raising the standard of the average man on the street.” Anohu-Amazu advised people to learn to put some savings aside for tomorrow, adding that “part of the problems we are having now in Nigeria is that in the period of boom we didn’t save. We did not make a concerted effort to take only what we needed and leave what we did not need for tomorrow. Now there is problem everywhere because the reserves are not reflective of the boom we had earlier on.
But have we learnt? That is the question. Every time we start an effort, half way down the line, it falls because the easier option is to sell barrels of oils get some USDollar. Why would we get into an arrangement where they ship things down to us? We should build the factories here. Nobody has engaged Nokia to come and put a plant here in Nigeria even when over 70 million people use handset.
My point is, how many industries, factories do we have here that are working with the kind of population that we have?
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