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SEPTEMBER 2014 - TAX INCENTIVES AND EXPENDITURE ALLOWANCES.

INTRODUCTION

To encourage further and continuing investments, various Tax Incentives and Tax Capital or Expenditure Allowances are embedded in the Statute Books waiting to be taken advantage of by businesses. Some of these investment incentives and expenditure allowances are succinctly highlighted in the following paragraphs.

Note however that only expenditures that are wholly, exclusively, necessarily and reasonably incurred in the trade or business of the tax payer can be claimed as a capital expenditure.

Also note that the depreciation of the assets of a company is not allowed under the Companies Incomes Tax Act in Nigeria. Instead, Capital Allowances are allowed.

PIONEER STATUS

By the Industrial Development (Income Tax Relief) Act, the Nigerian Investment Promotion Commission Act and the Pioneer Status Incentive Regulations 2014, companies engaged in gazetted pioneer industries and products are entitled to apply for Pioneer Status, and when granted, enjoy tax exemption/relief/holidays, for an initial term of three (3) years, starting from the date that the pioneer company commences business. The tax holiday period may be extended for a period of one (1) year, and a further one (1) year term, subject to the level of development and the relative importance at the time of the industry to the development of the country.

To qualify to apply for Pioneer Status however, the Applicant Company must among other things be registered as a corporate entity in Nigeria; and must have incurred qualifying capital expenditure of not less than Ten Million Naira (N10Million) in the pioneer industry concerned. Also, the application for the Pioneer Status must be submitted within one (1) year of the Applicant Company’s commencement of commercial production.

 

SOLID MINERALS

A new company engaged in the mining of solid minerals is entitled to tax exemption for the first three (3) years of its operations.

AGRICULTURAL AND FOREIGN LOANS

Interest payable on loans granted to agricultural trade or businesses, local plant and machinery fabrication, and working capital for any cottage industry, is/are also exempted from tax provided that the moratorium of the loan is not less than eighteen (18) months, and the rate of interest on the loan is not more than the base lending rate at the time the loan was granted.

Also, losses arising from an agriculturally based trade or business are allowed to be carried forward indefinitely.

For foreign loans, interest payable on foreign loans is exempted from tax in the manner prescribed in the Table in the Third Schedule of the Companies Income Tax Act (“CITA”).

HOTELS TOURIST INCOME

Twenty-five per cent (25%) of the income derived by a Hotel, in internationally convertible currencies, from tourists using the services of such a Hotel, are exempted from any form of tax, provided that such income is paid into a domiciliary account Reserve Fund, to be utilised within five (5) years in the building expansion of new Hotels, conference centres and other new facilities which promote tourism development.

RURAL INVESTMENT ALLOWANCE

Where a company provides for the purposes of its trade or business infrastructural facilities like electricity, water or tarred roads, which must be at least twenty (20) kilometres from such facilities provided by the Government, such a company will be entitled to claim both the Initial Allowance on such expenditure, and a further Rural Investment Allowance whose rate is graduated based on the scale of the facilities provided.

Where no public facilities exist, a hundred percent (100%) Rural Investment Allowance will be allowed by the tax authorities on such rural infrastructural expenditure(s).

A Rural Investment Allowance cannot however be carried forward.

RECONSTRUCTION INVESTMENT ALLOWANCE

To compensate businesses that incur expenditures on plant and machinery, CITA allows to such companies a ten per cent (10%) Reconstruction Allowance of the actual expenditure incurred on such plant and equipment. This is in addition to the initial allowance granted on such plant and equipment.

A Reconstruction and a Rural Investment Allowance cannot however be claimed on the same expenditure.

RESEARCH AND DEVELOPMENT (R & D) ALLOWANCE.

Companies and other organisations engaged in Research and Development activities (“R&D”) for commercial purposes, are entitled to claim a twenty per cent (20%) investment tax credit on their R&D qualifying expenditures.

Other companies who undertake R&D activities to promote their trade or business are also entitled to claim the expenses incurred on such R&D provided that the R&D expenditures do not exceed ten per cent (10%) of the company’s total profits in the financial year that the expenditure was incurred.

DEPRECIATION AND CAPITAL ALLOWANCES.

As it does not uphold of transparency and equity, the Companies Income Tax Act (“CITA”) disallows a company depreciating its assets. In place of the depreciation of a company’s assets, CITA makes provision for a transparent capital allowances regime which is encapsulated in CITA’s Second Schedule.

It is however only the qualifying expenditure expended on the assets of a company, which assets are wholly, exclusively, necessarily and reasonably utilised in the company’s trade or business, that are entitled to submit such claims for any kind of tax allowances.

INITIAL AND ANNUAL ALLOWANCES.

CITA allows a company to claim in its first year of use, an Initial Allowance on a capital expenditure expended on a business asset. The rates allowed for each asset group as an Initial Allowance is set out in Table 1 of Schedule 2 of the CITA.

For the following years that the asset is in use, the owner of the asset can claim an Annual Allowance which is the remainder of the Initial Allowance permitted under Table II of the Second Schedule of CITA.

Where a company purchases new plants and machineries in replacement of its old plants and machineries, such a company is allowed a once and for all ninety-five per cent (95%) capital allowance in the first year of the use of the asset. The remainder five per cent (5%) of the value of the asset is required to be retained in the financial books of the company until the asset is disposed off.

BALANCING ALLOWANCES AND BALANCING CHARGES

Balancing Allowances and Balancing Charges are other tax reliefs that a company can claim when it disposes of an asset.

A Balancing Allowance is the difference between the residual value of the asset and its sale value. This difference in an allowable tax deduction which can be written against the profit and loss accounts of the affected company.

Where the value of the asset at the point of its disposal is higher than the residual value of the asset, a Balancing Charge arises with the excess value written back to the profits of the company and taxed accordingly.

Note however that the maximum claim for capital and investment tax allowances that will be granted by the tax authorities is ninety-five per cent (95%) of the total cost of the qualifying asset.

EXPORT INCENTIVES

To promote the indigenous manufacture of products for export, various Export Incentives exist; like the Manufacture-In-Bond Guarantee; Duty Drawback Schemes; etc. Also in existence are Export Processing Zones for oil, gas and none oil and gas enterprises.

Products manufactured in Export Free of Export Processing Zones can only enjoy tax exemption if they are exported to another country, other than Nigeria.

CONCLUSION

In conclusion, fictitious, artificial or none bona-fide expenditures will not qualify to claim any tax allowance or relief.

DISCLAIMER NOTICE

This is a free educational material which does not create a Client/Attorney relationship. Readers are advised to always seek professional legal advice to their specific situations from qualified Legal Practitioners. Questions, comments, criticisms, suggestions, new ideas, contributions, etc. are always welcomed. You can also visit our website www.oseroghoassociates.com for more legal materials.

INTELLECTUAL PROPERTY PROTECTED.

This material is protected by International Intellectual Property Laws and Regulations. This material can only be re-distributed for non-profit educational purposes only on the strict condition that our authorship is acknowledged, and the Disclaimer Notice is prominently displayed.

 

Legal Alert – November 2014 – Joint Ownership of Property

Introduction.

The joint ownership of a property or properties continues to be a more common means of wealth creation. Joint ownership in some other instances serve as a succession plan that reduces estate taxes, Attorney Fees, etc.

As it is common with humans, the joint ownership of a property, either by contract, gift or by inheritance can lead to disputes and litigation between the surviving owner or owners and the deceased owner’s heirs, especially if the joint ownership instrument is not carefully drafted.

Joint Tenancy.

Joint Tenancy is the right to the ownership of a property, by more than one person, such that on the death of any of the joint owners, the deceased owner’s portion of the property passes to the surviving owner or owners of the property. The deceased owner’s estate and heirs under a joint ownership structure will receive absolutely nothing.

Also, subject to whether words of severance or separation are used in the title instrument under which the property is held, an owner to a jointly held property cannot alienate his or her interest in such a property without the express consent of the other co-owner(s) to the property.

Joint Owners and Tenants-in-Common.

The opposite to the above described joint tenancy scenario is the principle known as Tenants-in-Common which arises where the property’s instrument of title have words of severance or separation or distribution of the subject jointly held property. Where words of severance or separation are used, the words of severance or separation entitles the heirs or estate of a deceased owner to assume ownership of the deceased share of the property, with the surviving owner or owners of the property.

Conclusion.

Ensuring that the title document under which a property that is jointly owned is carefully drafted to achieve the estate plan of the owners of the property is strongly recommended. Where the joint owner or owners do not want their heirs to inherit any portion of the property on their demise, then no words of severance or separation should be used when drafting the instrument of ownership. Where the intention is for the heirs to inherit, then words of severance, separation or distribution should be used when drafting the instrument of ownership.

DISCLAIMER NOTICE

This is a free educational material which does not create a Client/Attorney relationship. Readers are advised to always seek professional legal advice to their specific situations from qualified Legal Practitioners. Questions, comments, observations, suggestions, new ideas, contributions, etc. are always welcomed. You can also visit our website www.oseroghoassociates.com for more legal materials.

INTELLECTUAL PROPERTY PROTECTED.

This material is protected by International Intellectual Property Laws and Regulations. This material can only be re-distributed for non-profit educational purposes only on the strict condition that our authorship is acknowledged, and the Disclaimer Notice is prominently displayed.

Introduction

A common global money laundering preventative measure is for Banks and other Designated Non-Financial Institutions (“DNFIs”) like Professional Practice Firms, Hotels, Casinos and the like, who perform fiduciary duties to always ensure that before and during the period of rendering these fiduciary services, they obtain and retain updated verifiable identification and location documentation on their customers or clients.

One of the know-your-customer (“KYC”) requirement is for the Institution concerned to request and obtain from all its customers, a third-party reference indicative of the good standing of the Customer to enjoy the fiduciary services of the Institution, Firm or Corporation concerned.

Unfortunately, many third parties who sign Reference Forms are not aware, and where they are aware, they are not mindful of the money laundering risks, which are criminal in nature, of signing Reference Forms in favour of persons whose character they are not very familiar with and cannot therefore vouch for.

Some of the money laundering risks of signing a Reference Form or forms is considered in the following paragraphs.     

Money Laundering and KYC

The Money Laundering (Prohibition) Act as amended in 2012, requires all Financial and DNFIs to always ensure that they undertake due diligence investigation when establishing and maintaining a business relationship with a customer.

Such due diligence investigation must authenticate the identity of the customer, the nature of the customer’s business, sources of funds and ascertain a money laundering risk profile for each customer or client.

Some of the verifiable means of identifying a customer includes obtaining the customer’s proof of identification – i.e. international passport or national identity card or driver’s license, etc; and proof of residence – i.e. utility bills; and third-party recommendation – i.e. signed Reference Form by an individual or Institution, Anti-Money Laundering EFCC/SCUML Registration Certificate; Tax Identification Number (“TIN”); etc.

As a result of a Credit Bureau System that is still at its elementary stage of development, cases of the identity of a customer of a financial Institution or a DNFI, when a financial crime is committed, usually exposes the Referee(s) to criminal investigation, with possible police detention and avoidable Attorney fees.

Anti-Money Laundering/Combating Financing of Terrorism Regulation

The Anti-Money Laundering/Combating Financing of Terrorism Regulations (“AML/CFT Regulations”) provides some guidance to financial institutions under the regulatory purview of the Central Bank of Nigeria (“CBN”) regarding compliance with the Laws on money laundering, terrorism, trafficking in human beings and the sexual exploitation of children, etc.

Thus, financial institutions should not establish any business relationship with a customer until all the relevant parties to the transaction are independently identifiable, and the nature of the business that the customer intends to conduct are ascertainable.

The AML/CFT Regulations requires financial institutions to regularly conduct customer due diligence, which for individuals will include confirming the Customer or Client correct legal names, permanent physical and or residential address, telephone numbers and email address, nationality, etc. The customer providing the Bank with his or her or its personal and other Bank References is also a legal requirement.

Some of the sanctions for non-compliance with the above due-diligence requirements include the imposition of a penalty not exceeding N2,000,000 (Two Million Naira) for each infringement, from the first to the fifth infringement. On the sixth infringement, the CBN shall set up an investigation panel to forensically examine the infringements and recommend more punitive punishment for the offenders.

Conclusion

It is strongly recommended that you heed the warning in the Reference Form provided by financial institutions and DFNIs which warning usually states that “CAUTION: it is dangerous to introduce any individual not well known to you”.

DISCLAIMER NOTICE

This is a free educational material which does not create a Client/Attorney relationship. Readers are advised to always seek professional legal advice to their specific situations from qualified Legal Practitioners. Questions, comments, criticisms, suggestions, new ideas, contributions, etc. are always welcomed. You can also visit our website www.oseroghoassociates.com for more legal materials.

INTELLECTUAL PROPERTY PROTECTED.

This material is protected by International Intellectual Property Laws and Regulations. This material can only be re-distributed for non-profit educational purposes only on the strict condition that our authorship is acknowledged, and the Disclaimer Notice is prominently displayed.

TAX INCENTIVES AND EXPENDITURE ALLOWANCES - SEPTEMBER 2014
 
INTRODUCTION
To encourage further and continuing investments, various Tax Incentives and Tax Capital or Expenditure Allowances are embedded in the Statute Books waiting to be taken advantage of by businesses. Some of these investment incentives and expenditure allowances are succinctly highlighted in the following paragraphs.

Note however that only expenditures that are wholly, exclusively, necessarily and reasonably incurred in the trade or business of the tax payer can be claimed as a capital expenditure.

Also note that the depreciation of the assets of a company is not allowed under the Companies Incomes Tax Act in Nigeria. Instead, Capital Allowances are allowed.

PIONEER STATUS
By the Industrial Development (Income Tax Relief) Act, the Nigerian Investment Promotion Commission Act and the Pioneer Status Incentive Regulations 2014, companies engaged in gazetted pioneer industries and products are entitled to apply for Pioneer Status, and when granted, enjoy tax exemption/relief/holidays, for an initial term of three (3) years, starting from the date that the pioneer company commences business. The tax holiday period may be extended for a period of one (1) year, and a further one (1) year term, subject to the level of development and the relative importance at the time of the industry to the development of the country.

To qualify to apply for Pioneer Status however, the Applicant Company must among other things be registered as a corporate entity in Nigeria; and must have incurred qualifying capital expenditure of not less than Ten Million Naira (N10Million) in the pioneer industry concerned. Also, the application for the Pioneer Status must be submitted within one (1) year of the Applicant Company's commencement of commercial production.

SOLID MINERALS
A new company engaged in the mining of solid minerals is entitled to tax exemption for the first three (3) years of its operations.

AGRICULTURAL AND FOREIGN LOANS
Interest payable on loans granted to agricultural trade or businesses, local plant and machinery fabrication, and working capital for any cottage industry, is/are also exempted from tax provided that the moratorium of the loan is not less than eighteen (18) months, and the rate of interest on the loan is not more than the base lending rate at the time the loan was granted.
Also, losses arising from an agriculturally based trade or business are allowed to be carried forward indefinitely.
For foreign loans, interest payable on foreign loans is exempted from tax in the manner prescribed in the Table in the Third Schedule of the Companies Income Tax Act ("CITA").

HOTELS TOURIST INCOME
Twenty-five per cent (25%) of the income derived by a Hotel, in internationally convertible currencies, from tourists using the services of such a Hotel, are exempted from any form of tax, provided that such income is paid into a domiciliary account Reserve Fund, to be utilised within five (5) years in the building expansion of new Hotels, conference centres and other new facilities which promote tourism development.

RURAL INVESTMENT ALLOWANCE
Where a company provides for the purposes of its trade or business infrastructural facilities like electricity, water or tarred roads, which must be at least twenty (20) kilometres from such facilities provided by the Government, such a company will be entitled to claim both the Initial Allowance on such expenditure, and a further Rural Investment Allowance whose rate is graduated based on the scale of the facilities provided.

Where no public facilities exist, a hundred percent (100%) Rural Investment Allowance will be allowed by the tax authorities on such rural infrastructural expenditure(s).

A Rural Investment Allowance cannot however be carried forward.

RECONSTRUCTION INVESTMENT ALLOWANCE
To compensate businesses that incur expenditures on plant and machinery, CITA allows to such companies a ten per cent (10%) Reconstruction Allowance of the actual expenditure incurred on such plant and equipment. This is in addition to the initial allowance granted on such plant and equipment.

A Reconstruction and a Rural Investment Allowance cannot however be claimed on the same expenditure.

RESEARCH AND DEVELOPMENT (R & D) ALLOWANCE.
Companies and other organisations engaged in Research and Development activities ("R&D") for commercial purposes, are entitled to claim a twenty per cent (20%) investment tax credit on their R&D qualifying expenditures.
Other companies who undertake R&D activities to promote their trade or business are also entitled to claim the expenses incurred on such R&D provided that the R&D expenditures do not exceed ten per cent (10%) of the company's total profits in the financial year that the expenditure was incurred.

DEPRECIATION AND CAPITAL ALLOWANCES.
As it does not uphold of transparency and equity, the Companies Income Tax Act ("CITA") disallows a company depreciating its assets. In place of the depreciation of a company's assets, CITA makes provision for a transparent capital allowances regime which is encapsulated in CITA's Second Schedule.

It is however only the qualifying expenditure expended on the assets of a company, which assets are wholly, exclusively, necessarily and reasonably utilised in the company's trade or business, that are entitled to submit such claims for any kind of tax allowances.

INITIAL AND ANNUAL ALLOWANCES.
CITA allows a company to claim in its first year of use, an Initial Allowance on a capital expenditure expended on a business asset. The rates allowed for each asset group as an Initial Allowance is set out in Table 1 of Schedule 2 of the CITA.

For the following years that the asset is in use, the owner of the asset can claim an Annual Allowance which is the remainder of the Initial Allowance permitted under Table II of the Second Schedule of CITA.

Where a company purchases new plants and machineries in replacement of its old plants and machineries, such a company is allowed a once and for all ninety-five per cent (95%) capital allowance in the first year of the use of the asset. The remainder five per cent (5%) of the value of the asset is required to be retained in the financial books of the company until the asset is disposed off.

BALANCING ALLOWANCES AND BALANCING CHARGES
Balancing Allowances and Balancing Charges are other tax reliefs that a company can claim when it disposes of an asset.
A Balancing Allowance is the difference between the residual value of the asset and its sale value. This difference in an allowable tax deduction which can be written against the profit and loss accounts of the affected company.

Where the value of the asset at the point of its disposal is higher than the residual value of the asset, a Balancing Charge arises with the excess value written back to the profits of the company and taxed accordingly.

Note however that the maximum claim for capital and investment tax allowances that will be granted by the tax authorities is ninety-five per cent (95%) of the total cost of the qualifying asset.

EXPORT INCENTIVES
To promote the indigenous manufacture of products for export, various Export Incentives exist; like the Manufacture-In-Bond Guarantee; Duty Drawback Schemes; etc. Also in existence are Export Processing Zones for oil, gas and none oil and gas enterprises.
Products manufactured in Export Free of Export Processing Zones can only enjoy tax exemption if they are exported to another country, other than Nigeria.

CONCLUSION
In conclusion, fictitious, artificial or none bona-fide expenditures will not qualify to claim any tax allowance or relief.

DISCLAIMER NOTICE
This is a free educational material which does not create a Client/Attorney relationship. Readers are advised to always seek professional legal advice to their specific situations from qualified Legal Practitioners. Questions, comments, criticisms, suggestions, new ideas, contributions, etc. are always welcomed. You can also visit our website www.oseroghoassociates.com for more legal materials.

INTELLECTUAL PROPERTY PROTECTED.
This material is protected by International Intellectual Property Laws and Regulations. This material can only be re-distributed for non-profit educational purposes only on the strict condition that our authorship is acknowledged, and the Disclaimer Notice is prominently displayed.
In this Issue:-
 
1. Legal Article – August 2014 – NEW PENSION REFORM ACT 2014 – COMPLIANCE HIGHLIGHTS.
2. Disclaimer Notice.
3. Copyright Notice.

PENSION ALERT – AUGUST 2014 - NEW PENSION REFORM ACT 2014 – COMPLIANCE HIGHLIGHTS.

The Pension Reform Act, 2014 repealed the 2004 Pension Reform Act, No. 2 with the objective of improving the Uniform Contributory Pension Scheme, and the retirement benefits following thereof, for persons in the public and private sectors of the Nigerian economy. Persons in the Armed Forces, Intelligence and Secret Services continue to be exempted from this Contributory Pension Scheme.
It is now obligatory for employers in the private sector of the economy, with fifteen (15) or more employees, to register and make contributions to the Pension Contributory Scheme. Self-employed persons and employers with less than three (3) employees have the option to decide whether or not to join the Pension Contributory Scheme, in accordance with the Guidelines that the National Pension Commission may issue from time to time.

RATE OF PENSION CONTRIBUTIONS
The monthly rate of contributions to the Pension Contributory Scheme is now a minimum of ten per cent (10%) of each employee's monthly emolument to be contributed by the Employer, and a minimum of eight per cent (8%) of each employee's monthly emolument, to be contributed by the Employee.
Employers and employees are allowed to increase their pension contributions beyond the minimum rates prescribed under this Law. An employer can also elect to bear the entire monthly Pension Contribution, provided that such a contribution shall not be less than twenty per cent (20%) of the employee's total monthly emolument.
The penalty for not deducting and or remitting a Pension Contribution within seven (7) days of the payment of every employee's monthly emolument shall not be less than two per cent (2%) of the total contribution that remains unpaid or unremitted by the employer.

GROUP LIFE INSURANCE COVER
The 2014 Pension Reform Act reinstates the compulsory Group Life Insurance Cover - previously provided for under the repealed 2004 Pension Reform Act - by requiring all employers, already aliable to make compulsory monthly Pension Contribution(s), to also maintain a Group Life Insurance Policy in favour of each of their employees for a minimum of three (3) times the annual total emolument of the employee(s).
The premium for the Group Life Insurance Cover must be paid not later than the date of the commencement of the Insurance cover.
Where the death of an employee occurs with no Group Life Insurance Cover in place, the employer shall be directly and strictly liable to bear the death benefit claims of such a deceased employee's Estate.

TAX EXEMPTION.
Contributions to the Uniform Pension Contributory Scheme are tax exempted; i.e., they are tax deductible expenses in the computation of the tax payable by the Pension Contributor.
Also, all interest, dividends, profits, investments, retirement benefits, etc, arising from and paid in accordance with the provisions of the 2014 Pension Reform Act or any other income accruable to Pension Funds and Assets, are also exempted from taxation.

PROTECTION OF PENSION FUNDS.
In addition to the express prohibition of Pension Fund Administrators ("PFA'') retaining or dealing in Pension Assets, Pension Fund Administrators ("PFA") are required to maintain a statutory Contingency Reserve Fund to meet any claim that such a PFA may become liable for. Subject to such Guidelines as the National Pension Commission ("NPC") may issue, the Statutory Reserve Fund is required to be credited with 12.5% of the net profit after tax of each PFA.

Each PFA is also required to establish and maintain a Pension Protection Fund which Fund secures the benefits of eligible Pension Contributors under the 2014 Pension Reform Act.

Retirement Savings Account Holders, who have made their pension contributions for a number of years, shall be entitled to some minimum pension benefits as shall be specified in the Guidelines issued by NPC.

PENALTIES – PENSION CONTRAVENTIONS.
Any person, who without a Licence, carries on business as a Pension Fund Administrator ("PFA") or as a Pension Fund Custodian ("PFC"), or whoever misappropriates or diverts Pension Funds, commits an offence and is liable on conviction to a fine of not less than N10Million (Ten Million Naira) for carrying on pension business without a licence; and a fine of an amount equal to three times the amount misappropriated in cases of Pension Funds and Assets misappropriated; or a term of imprisonment of not less than 10 (ten) years or to both the fine and the term of imprisonment.

Where the offence is committed by a corporate body, the fine must not be less than N50Million (Fifty Million Naira); with each Director and Officer of the offending corporation liable to a fine of N5Million (Five Million Naira) or to a term of ten (10) years or to both the fine and the term of imprisonment.

In addition to the fine and imprisonment, a Court of Law may order the forfeiture of the property, asset or proceeds of the pension contravention to the National Pension Commission ("NPC"). This is also in addition to the accrued interest attached to the proceeds of the unlawful pension activity and benefit.

PENSION DISPUTE RESOLUTION
As dispute is a part of human existence, a dissatisfied employee with a pension decision has the right to formally request the National Pension Commission to review a disputed decision. The National Pension Commission is required to ensure that it reaches a decision on any pension dispute without any delay.

Where the employee, the PFA or the employer is/are dissatisfied with a decision of the National Pension Commission, such dissatisfied party has the right to refer the dispute for resolution in accordance with the provisions of Arbitration and Conciliation Act, or to the National Industrial Court, whose decision shall be final and binding on the parties.
There is no Statute of Limitation to actions for the recovery of pension contributions, penalties and other benefits under the 2014 Pension Reform Act.

OBSERVATIONS
Increments in the rate of pension contributions by compliant employers will only further increase the cost of doing business and discourage new employment. This is especially as the level of compliance and enforcement with the provisions of the repealed 2004 Pension Reform Act was very, very dismal.

Also, there is a lacuna as to whether employers with more than three (3), but less than fifteen (15) employees, are mandatorily required to comply with the provisions of the Pension Reform Act, 2014. It is hoped that the NPC Guidelines when released, will provide some direction in this area.

The confidentiality provisions in this new Pension Law are reminiscent of draconian military decrees. These confidentiality provisions are also likely to conflict with the provisions of the 1999 Constitution (as amended) and the Freedom of Information Act.
Due to the average life expectancy in Nigeria being less than 55 years, commentators have seriously questioned the propriety of the retirement age of 60 years, as provided for in the Pension Reform Act, 2014. This is especially as the principal beneficiary of the Pension Scheme is the employee and not the employee's estate on the employee's demise
There are no protective whistle-blowers provisions in this legislation. In a country with a very high unemployment rate, many employers may continue to breach the provisions of the mandatory contributory pension scheme thereby inhibiting the ability of the scheme to be self-sustaining.

DISCLAIMER NOTICE
This is a free educational material which does not create a Client/Attorney relationship. Readers are advised to always seek professional legal advice to their specific situations from qualified Legal Practitioners. Questions, comments, criticisms, suggestions, new ideas, contributions, etc. are always welcomed. You can also visit our website www.oseroghoassociates.com for more legal materials.

INTELLECTUAL PROPERTY PROTECTED.
This material is protected by International Intellectual Property Laws and Regulations. This material can only be re-distributed for non-profit educational purposes only on the strict condition that our authorship is acknowledged, and the Disclaimer Notice is prominently displayed.