Most private sector employers are yet to comply with provisions of the Tier-2 pension scheme, which mandates companies to contribute 5 percent into a privately managed pension scheme.
Out of 51,466 private establishments/companies active under the Social Security and National Insurance Trust (SSNIT), only 20,876 (40.5 percent) are enrolled under the mandatory Second Tier Occupational Scheme.
The Tier-2 scheme is privately managed by trustees approved and licensed by the National Pensions Regulatory Authority (NPRA).
Meanwhile, the NPRA, regulator of the country’s pensions industry, including SSNIT, says it lacks the power to take on employers that flout the law, which it cited for the low compliance rate.
Its Chief Executive Officer, Hayford Atta Krufi, explained that, unlike SSNIT, the NPRA does not have the power to use legal means to compel compliance, and that it only depends on whistleblowers, persuasion and the Attorney General’s office to enforce compliance.
“If as a regulator, you do not give us the power to prosecute those who flout the law, then, it becomes like going through a wild goose chase.
At the moment, we have to go through the Attorney General to undertake prosecution, and the process is not very clear. SSNIT, which is under us, has got the power to prosecute, but NPRA been the regulator, does not have any power to prosecute,” Hayford Atta Krufi told the B&FT during an NPRA workshop for journalists.
In order for the authority to be able to play its intended role, he said, it is important for it to be given the legal backing to compel defaulters to conform to provisions of the law.
This, he added, will not only bring about growth in the pensions industry, but would increase the sector’s contribution to the national economy.
“We understand that the contributor is the biggest regulator; so, we do have people coming to us to complain. But I don’t think that we should rely on whistleblowing to do our work; that is why we are asking for the power to prosecute and this will also increase coverage,” he appealed.
The National Pensions Act 766, 2008, mandates the establishment of a new contributory Three-Tier Pension Scheme: The Tier 1 or Basic SSNIT Scheme, is compulsory for all formal sector workers; the Tier 2 or Occupational Pension Scheme, also compulsory with a minimum contribution rate of 5 percent by the employer but privately managed; and the third tier, is a Voluntary Provident Fund and Pension Scheme for those in the informal sector.
However, almost eight years into the implementation of the new system, private sector employers’ compliance with the new law, particularly so far as the Tier 2 is concerned, still remains very low.