The National Pension Commission (PenCom) is ramping up its efforts to recover unpaid pension contributions from electricity generation and distribution companies (Gencos and Discos) across Nigeria. These companies have accumulated significant debt, amounting to billions of naira in unpaid contributions and penalties, despite repeated warnings, enforcement actions, and attempts at out-of-court settlements. PenCom’s Director-General, Omolola Oloworaran, recently led a delegation to the Nigerian Electricity Regulatory Commission (NERC) to request their intervention in enforcing compliance among the delinquent power companies. This visit underscores the seriousness of the issue and the collaborative approach PenCom is taking to address it. The non-remittance of pension contributions is a violation of the Pension Reform Act 2014, and negatively impacts the retirement security of employees in the power sector.
PenCom’s pursuit of these unpaid contributions highlights its commitment to safeguarding the pension rights of Nigerian workers. The commission has emphasized the statutory obligation of employers to deduct and remit monthly pension contributions for their employees into Retirement Savings Accounts (RSAs). This is a critical component of the Contributory Pension Scheme (CPS), which aims to provide a sustainable and secure retirement income for employees. The failure of Gencos and Discos to comply with this obligation not only jeopardizes the financial well-being of their employees but also undermines the integrity of the entire pension system. The visit to NERC represents a strategic effort to leverage the regulatory authority of NERC to ensure compliance within the power sector.
Oloworaran’s request for NERC to mandate the presentation of a valid Pension Clearance Certificate (PCC) as a prerequisite for licensing and other regulatory approvals is a significant step towards strengthening compliance. The PCC serves as proof that an organization is fulfilling its pension obligations. By making it a mandatory requirement for regulatory approvals, NERC can exert considerable pressure on Gencos and Discos to comply with the Pension Reform Act. This measure would effectively link operational licensing and regulatory approvals to pension compliance, creating a strong incentive for the power companies to meet their obligations. This approach aims to prevent future defaults and ensure that all employees in the sector are covered by the pension scheme.
PenCom’s proactive approach extends beyond direct engagement with the defaulting companies. The commission has appointed recovery agents to establish and recover outstanding pension liabilities across the private sector, including the electricity industry. This demonstrates PenCom’s commitment to utilizing various avenues to retrieve the unpaid funds and protect the interests of employees. Despite these efforts, some electricity companies continue to disregard their obligations even after the liabilities have been clearly established. This persistent non-compliance underscores the need for stronger enforcement mechanisms and collaboration with regulatory bodies like NERC. The fact that some companies continue to default even after recovery agents have been appointed suggests a deeper issue of disregard for regulatory compliance.
NERC’s Chairman, Sanusi Garba, expressed his commitment to supporting PenCom’s efforts. He pledged NERC’s full support for enforcing pension compliance within the sector and called for a thorough reconciliation of outstanding liabilities. This commitment is crucial for the success of PenCom’s recovery efforts. The collaborative approach between the two regulatory bodies strengthens the message of accountability and increases the likelihood of successful recovery. Garba’s assurance of collaboration signifies a joint effort to find a lasting solution to the problem of pension defaults within the power sector. This collaborative approach aims to create a more robust enforcement framework.
The situation with the Gencos and Discos highlights the broader challenge of pension compliance in Nigeria. While PenCom has made significant strides in recovering unpaid contributions, the continued defiance of some companies underscores the need for continued vigilance and strengthened enforcement mechanisms. The collaboration with NERC represents a promising strategy for tackling this challenge within the power sector. Ultimately, the aim is to ensure that all employees have access to the retirement benefits they are entitled to and that the integrity of the Nigerian pension system is maintained. This ongoing effort is crucial for building a robust and sustainable pension system that protects the financial well-being of Nigerian workers.
