Section 51 and 52 highlights the offences and penalties under the NPS Act No. 40 of 1996.
They include the following:
- Evading payment of contributions (section 51 (1) (a))– This happens when employers do not pay the required social security contributions when required under the Act to do so. It may also include late remittance of contributions. –Section 12 of the NPS Act defines who a contributing employer is and this includes any person, association, Institution, Firm registered as a tax payer with a tax payer with a contract of service with an employee. It also includes the Government of the Republic of Zambia, Local Authority or parastatal or statutory body.
-The Act also empowers employers to recover from an employee who is a member of the scheme, the amount of contributions from his earnings (Section 14(1) (2)
- Failing to register within the period specified (section 51(1) (b) -An employer should apply for registration within one month of commencing business. (Section 13(1)). The period of one month begins on a date when the person/employee/member concerned becomes a contributing employee.
- Please note that section 13(13) of the NPS Act obligates and empowers a contributing employer to register everyperson who becomes an employee in his service and also obliges him to provide the particulars of such employees.
- An employer is required to submit a duly completed Employer Registration Form number NPS 411 and accompanied with Member Registration Forms.
- As proof of registration, An Employer account number shall be availed in writing.
- Failure to furnish information or furnishing False Information (Section 51(1)(c) that is, refusal to give a name or address is categorized as such. Section 15(1) of the NPS Act also obliges contributing employers to submit with all payments, all prescribed supporting particulars concerning employees’ earnings.
- Obstructing an Inspector, Officer or servant of the Scheme in the discharge of his duties. Section 51(1)(e).The word obstructs includes any act that hinders or interferes or amounts to meddling or hampering the activities of the officers mentioned above in the performance of their duties, that is, refusal to provide identification and giving false names can amount to obstruction.
- Failing to produce documents when required to do so without lawful excuse Section 51(1) (f). Section 7(5) of the NPS Act empowers Inspectors to Inspect any books pertaining to employee’s contributions. Further, Section 15(1) of the NPS Act also obliges contributing employers to submit with all contribution payments, all prescribed supporting particulars concerning employee’s earnings.
Any person who contravenes any of the provisions of the Act is guilty of an offence and liable on conviction to a fine not exceeding 1000 penalty units, or to imprisonment for a term not exceeding three months or to both(Section 51(1))
In addition, the Act provides that the Court may also order such persons so convicted to pay all outstanding contributions and penalties due to the scheme at the date of conviction.
PENALTIES ON UNPAID OR LATE CONTRIBUTIONS AND WHY THEY ARE CHARGED
Section 15(2) of the NPS Act prescribes that penalties will be charged on all late or unpaid contributions. It states as follows:
“if any contribution is not paid within the time stated under subsection (1) a sum equal to twenty per centum of the amount unpaid shall be added as a penalty for each month or part thereof after the date the payment is due and the amount of the penalty shall be recoverable as a debt owing to the Scheme by the employer”
The foregoing section prescribes that a 20% cumulative penalty shall be charged on all unpaid or late contributions.
This penalty charged on two major grounds:
- It is compensation to NAPSA for the lost investment gains which would have been made and eventually passed on the pensioner. At the time of retirement, the pensioner will have to be paid as though the money was received in the month it was deducted/due irrespective of whether NAPSA received it on time or not.Earlier on, we saw that NAPSA pays out much more in terms of pension and lump sum payments than it receives in contributions.
In order to make it possible for such good payments to be sustained, NAPSA needs to invest all the funds received and to do so on time. Any delays may result in a situation where NAPSA’s obligations may outweigh its capacity to pay.
The penalty therefore acts as compensation for the lost investment earnings
- The most obvious reason it is charged is because the Act prescribes it as a penal measure to deter would-be defaulters from doing so.
In line with the provisions of the NPS Act above, the prosecutions conducted during the first half of 2013 by NAPSA stood at 60(.i.e. prosecuted and convicted employers)