The National Pension Commission (PenCom) deserves commendation for its efforts to ensure that employers comply with Nigeria’s pension laws and that workers’ retirement savings are protected. However, the recent introduction of a charge of ₦100,161.25 for the generation of a Pension Compliance Certificate (PCC) deserves urgent reconsideration, particularly because of its potential impact on contractors and small and medium-sized businesses.
According to affected contractors, the Pension Compliance Certificate was obtainable without this charge earlier in the year, but applicants are now being required to pay ₦100,161.25, described as the amount payable for PCC certificate generation.
While the importance of pension compliance cannot be disputed, the question is whether the financial burden attached to obtaining the certificate is proportionate to the realities facing businesses that are already struggling with the high cost of operating in Nigeria.
For many contractors, obtaining a PCC is not optional. It is often a prerequisite for participating in government procurement processes.
This creates a difficult situation for contractors.
A contractor may spend money to register, maintain workers, pay salaries, remit pension contributions, obtain insurance, prepare tender documents, meet tax obligations and comply with several other regulatory requirements. At the end of the process, the contractor may still not win any contract.
Yet, the cost of obtaining the compliance documentation is incurred whether or not the contractor eventually secures a contract.
This is where the concern about the new PCC charge becomes particularly important.
PENSION COMPLIANCE IS A LEGAL OBLIGATION
The Pension Reform Act 2014 established the legal framework for the Contributory Pension Scheme and empowered PenCom to regulate and supervise pension matters in Nigeria.
The law requires employers covered by the scheme to participate and remit pension contributions within the prescribed period. Employers are required to remit pension contributions not later than seven working days after salary payment.
The purpose of these provisions is clear: workers should not be deprived of their retirement savings because an employer fails to meet its pension obligations.
PenCom’s compliance requirements include evidence of pension contribution remittances, employee schedules and a valid Group Life Insurance policy, among other documents.
Therefore, contractors should not be encouraged to avoid pension obligations. On the contrary, every employer should comply with the law and ensure that workers’ pension contributions are paid promptly.
But compliance should not become an excessive financial burden that discourages legitimate businesses from participating in public procurement.
WHERE IS THE BALANCE?
The National Pension Commission has statutory powers under the pension law, including regulatory and administrative powers relating to pension compliance.
However, the existence of regulatory powers does not remove the need for transparency, fairness and proportionality in the application of charges.
If the ₦100,161.25 PCC generation charge is a newly approved regulatory fee, contractors deserve clear information about its legal and administrative basis.
PenCom should therefore publicly explain:
What is the statutory or regulatory instrument authorising the ₦100,161.25 charge?
When was the fee approved?
What services or administrative costs does the amount cover?
Why was the certificate previously obtainable without this charge, according to contractors?
Is the payment annual, per application or based on the size of the company?
Are there concessions for small businesses and contractors who may apply for certificates without eventually securing contracts?
These are legitimate questions that should be answered openly.
THE SMALL CONTRACTOR IS ALREADY UNDER PRESSURE
Nigeria needs businesses that can employ workers, pay salaries, remit pensions and participate in government procurement.
A contractor who pays pension contributions for his workers is already performing an important social responsibility. The contractor is helping to protect the future of employees who depend on the Contributory Pension Scheme.
But the contractor also needs a viable business environment.
Imagine a company that spends substantial sums every year maintaining compliance, paying pension contributions and meeting other statutory obligations, only to apply for a PCC and pay another ₦100,161.25 without any guarantee of securing a contract.
If the contractor eventually wins no contract throughout the year, the expense produces no corresponding business revenue.
Repeated regulatory charges of this nature can become particularly significant for small contractors operating on narrow margins.
PENCOM SHOULD NOT LOSE SIGHT OF ITS MANDATE
The objective of pension regulation is ultimately to protect workers and ensure that retirement benefits are available when due.
The pension system is designed to ensure that workers receive their retirement benefits when due, reduce old-age poverty and establish a transparent and sustainable pension system.
PenCom has also strengthened its compliance framework, making valid PCCs increasingly important for organisations and vendors seeking to do business with government institutions and regulated entities.
Precisely because the certificate is increasingly indispensable, its cost should be carefully considered.
A CALL FOR REVIEW
PenCom should consider reviewing the ₦100,161.25 PCC generation charge, particularly for small contractors and businesses that may have to obtain the certificate merely to qualify to bid for contracts.
There should be a distinction between promoting pension compliance and imposing unnecessary financial pressure on compliant businesses.
One possible approach would be a tiered or nominal administrative fee, especially for small and medium-sized enterprises.
Another option could be to provide a system where a valid PCC remains usable for a reasonable period across eligible procurement processes rather than requiring businesses to incur substantial costs repeatedly.
The Commission could also consider publishing a detailed fee schedule and the regulatory basis for every charge associated with the PCC process.
Transparency would remove suspicion and enable businesses to understand exactly what they are paying for.
WORKERS’ PENSIONS MUST BE PROTECTED — BUT BUSINESSES MUST ALSO SURVIVE
There should be no argument about the importance of workers’ pensions.
Employers must pay pension contributions. Workers must receive the protection guaranteed under the law. PenCom must enforce compliance. Government procurement must also ensure that contractors are responsible employers.
But regulation should not unintentionally make it harder for legitimate contractors to survive.
The contractor who pays pension contributions, salaries, taxes and other statutory obligations is contributing to the Nigerian economy.
At a time when businesses are facing rising operating costs, inflation and increasing regulatory expenses, every additional charge deserves careful examination.
The issue, therefore, is not whether pension compliance should be enforced. It should.
The issue is whether a charge of ₦100,161.25 for PCC generation is reasonable, transparent and proportionate, particularly for small contractors who may pay the money without eventually securing any government contract.
PenCom should listen to the concerns of contractors and other stakeholders and explain the basis for the charge.
Where necessary, the Commission should consider reducing the burden.
A strong pension system requires compliance, but a strong economy also requires businesses capable of employing workers and paying their pensions.
PenCom should protect the pension of the worker without placing an unnecessary burden on the employer.
Chief Edet Isong
Newsday Newspaper