Wednesday, January 18, 2023
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SocietyDraft bill obligates banks to secure timely deposit of pension funds

Draft bill obligates banks to secure timely deposit of pension funds

A draft bill presented to the House of Peoples’ Representatives (HPR) sets to impose on banks and related financial institutions a duty to deduct/transfer from accounts of private organizations that collect pension from their employees but fail to deposit the money timely to the Pension Fund.

According to the bill, banks and other financial institutions that are required to implement the decision must apply the order without any precondition and if the institutions fail to do so, they might be obliged to pay the liability.

“Any bank or financial institution that is requested by the pension fund or any other institution that is delegated by the fund to collect pensions should deduct the pension contribution, interest and penalty from the bank account of the private organization and is obliged to deposit it to the fund.”

The agency for private employees’ pension fund or entrusted with collecting pension fund has the power deduct any private company’s debt unpaid for six months from the company’s bank or financial institution account and deposit it to the fund.

Accordingly, any bank or financial institution requested by the concerned authority shall comply immediately without preconditions and deposit the required amount to the fund. Any financial institution/ bank is also required to freeze the account of the company in question, until the whole amount overdue is fully paid, the bill proposes.

If any amount is deducted from the employer’s account before the payables are deducted, the financial institution or bank that was requested by the authority will be liable to that amount. In order to help control this, any private employer that has employees under the pension fund program is required to provide a written detail of its accounts in any bank or financial institution and notify the Fund within a fortnight, whenever it makes changes to these details.

While every private employer is required to collect the contribution from its employees, add its own contribution and deposit it to the Fund each month, the bill tabled before the HPR requires employers to deposit the amount within 30 days since the payment of the last monthly salary paid to its employees.

In an event where employers do not comply with this, they will be liable to deposit interest at the bank, and a five percent fine calculated based on the total amount.

However, the fine cannot exceed the total amount the employer is liable to the Fund. The bill, which was sent to the HoPR for approval by the Council of Ministers, is expected to be among the first bills the new parliament would look in to.

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