The National Pension Commission (PENCOM) recently issued two separate Public Notices (PNs) to employers and employees on certain compliance requirements with the Pension Reform Act (PRA), 2014. The PNs reiterate the provisions of Section 4(5) of the PRA, 2014 which require employers to maintain group life insurance policies in favour of their employees. They also reinforce the rights of employees to group life insurance policy and request employees to take necessary steps to demand compliance from their employers.
The PN to employers emphasizes the requirement to submit copies of Insurance Certificates with the schedule of benefits to PENCOM. The PN also urges employers who are yet to submit copies of Insurance Certificates for the current year to do so by 31 March 2018, failing which PENCOM would consider such employers in default of Section 4(5) of the PRA, 2014. This requirement is in line with Section 5.5 of the Guidelines for the Life Insurance Policy for Employers (Guidelines) which was jointly issued by the National Insurance Commission and the National Pension Commission.
The PN to employees seeks to remind them of their rights to employer-provided life insurance policies and the contributory pension scheme. Consequently, it advises employees to report their employers’ failure in respect of the following:
- Procurement of the minimum required life insurance policy in their favour;
- Submission of the evidence of compliance with life insurance policy to PENCOM and placement of the certificate in a conspicuous place within the organisation; and
3. Remittance of the deducted Pension Contributions into their Retirement Savings Account.
The PNs should raise greater awareness on the requirement for employers to provide group life insurance policies for their employees as stated under Section 4(5) of the PRA, 2014 as well as the above-referenced Guidelines. However, it is doubtful that employees would be able to serve as checks on their employers, given that there are no provisions in the PRA, 2014 or in the Guidelines for the protection of a “whistle-blowing employee” in the event of a default by his/her employer.
Although the PN to employers requires them to place Insurance Certificates in conspicuous places in their organisations, it will be difficult to enforce sanctions for failure to place such certificates as required by the PN. Given that the strict provisions of the PRA, 2014 only requires the employers to maintain group life insurance policies rather than paste Insurance Certificates, a simple demonstration of compliance by an employer should as well suffice.
PENCOM’s efforts in providing greater awareness on the responsibility of employers as well as the rights of employees in respect of group life insurance policies and pension contributions is highly commendable. However, it is equally important to introduce processes to monitor and ensure compliance with the guidelines and the PRA.