PENALTIES FOR NON-COMPLIANCE WITH PENSION REFORM ACT 2004

An Act specifies penalties for non-compliance with the Pension Reform Act, including fines and criminal charges. It targets employers who fail to remit contributions and pension operators to deter violations and protect the pension system.

What Is This Policy?

The statutory provisions of the Pension Reform Act specifying the criminal and civil penalties applicable to employers, employees, and pension operators who violate their obligations under the Act.

Who Does It Target?

Employers who fail to deduct and remit pension contributions Directors of defaulting companies Licensed pension operators who violate the Act PenCom as the enforcing authority

What Does It Aim to Achieve?

Deter non-compliance with the Pension Reform Act through clear, meaningful financial penalties and criminal liability, ensuring Nigeria's pension system is protected from abuse and neglect.

Key Features

Employer Criminal Liability: Directors and officers of companies that persistently fail to remit pension contributions face criminal prosecution and imprisonment. Financial Penalties: Defaulting employers face fines equal to the outstanding contributions plus a 2% monthly interest penalty. Operator Penalties: PFAs and PFCs that violate their licences face fines up to 10% of pension assets under management. Prosecution Procedures: PenCom may initiate prosecution of defaulters through EFCC or directly through the courts.

Current Status

Rollout Stage: Active Coverage: All employers, operators, and other parties under the CPS Beneficiaries: Pension contributors; enforcement system Funding: Penalties collected support the pension protection mechanism

How to Access

Employers: ensure timely deduction and remittance of pension contributions Operators: comply fully with all PenCom regulations to avoid liability Employees: monitor RSA statements for non-remittance by employers Application method: PenCom initiates enforcement; employees report non-compliance to PenCom.

Important Terms

Ignorance of the law is not a defence to a penalty charge Criminal prosecution may proceed even where outstanding contributions are later paid The 2% monthly interest penalty is statutory and cannot be reduced by negotiation

Official Resources

Website: https://www.pencom.gov.ng Contact: National Pension Commission (PenCom)

Legal Framework

The Penalties for Non-Compliance with the Pension Reform Act Regulations are issued under the Pension Reform Act 2014 and the National Pension Commission (PENCOM) Act. They operate alongside the Companies and Allied Matters Act 2020, the Labour Act, and the FIRS (Establishment) Act 2007 (on tax deductibility of pension contributions). Constitutional authority derives from Section 173 of the 1999 Constitution on retirement benefits for public officers.