Pensions: The employee’s contribution does not belong to the company

A tense end of month at Sotuba Plastiques. A major customer is paying late, cash is running dry, and the finance director suggests “pushing back the INPS by two or three months”. Yet on every payslip, the pension deduction has indeed been taken. That money is not an overdraft facility: it belongs to the employees.

Sotuba Plastiques and the people mentioned in this article are fictitious: they are used as examples only.

1. What exactly are we talking about?

Sotuba Plastiques makes jerrycans and buckets in Bamako and employs 80 people. Like all employers subject to the Labour Code, it falls under the schemes managed by the National Social Security Institute (INPS).

The Social Security Code comprises four schemes (Social Security Code, article 1):

• family benefits;
• compensation for and prevention of accidents at work and occupational diseases;
• old-age, disability and death insurance, i.e. the pension scheme;
• protection against illness.

They are managed by the INPS (article 3), for all workers covered by the Labour Code (article 2). The pension scheme protects employees and their families against loss of income due to old age, disability or death.

The most common mistake

Confusing this “protection against illness” scheme, which organises occupational health, with compulsory health insurance. The latter falls under a separate text, which is not covered here.

Four schemes, one manager: the INPS.

2. A double contribution, 40% of which is paid by the employee

Pensions are funded by a double contribution, from the employer and the employee. The employee share is the contribution paid by the employee, deducted from their salary; it represents 40% of the rate set for this scheme (Social Security Code, article 197). The rate itself is set by decree (article 192).

Contributions are based on all remuneration, including benefits in kind and allowances, except reimbursement of expenses (article 187). The base can never be lower than the SMIG (article 189).

According to the scale published by the INPS, the branch rate is 9%: 3.6% paid by the employee and 5.4% by the employer, of which 3.4% for old age and 2% for disability and death.

Example. Sotuba Plastiques’ monthly payroll is XOF 20,000,000.

Total pension contribution: 20,000,000 × 9% = XOF 1,800,000

Employee share, 40% of the rate: 9% × 40% = 3.6%, i.e. XOF 720,000 deducted from wages

Employer share: 1,800,000 − 720,000 = XOF 1,080,000 paid by the company

Why make the employee contribute? Because the risks covered, old age, disability and death, often occur when the contract has ended or is suspended, and not always for work-related reasons. Employees contribute to their own protection.

Withholding: a deduction the employee cannot refuse

Withholding is the deduction of the employee share made by the employer at each pay. The employee cannot object to it, and payment of the salary net of this deduction discharges the employee’s contribution (article 201). From then on, the employer holds a sum that belongs to the employee and the INPS.

What you need to do

• Show the employee pension share on every payslip.
• Check the contribution rate in force, set by decree, every year.
• Include benefits in kind and bonuses in the contribution base.

3. Paying on time: deadlines that are not up for discussion

Contributions are paid to the INPS within the first fifteen days of each month if the employer has more than nine employees, and within the first fifteen days of each quarter if it has fewer than ten (Social Security Code, article 199). At each due date, the employer attaches a summary declaration of wages (article 203) and, every quarter, a nominative statement of wages (article 204).

Above all, an employer that cannot pay its contributions on the due date must nevertheless immediately pay the INPS the amounts withheld from wages (Social Security Code, article 202). The employee share therefore comes first: it is the only one that can never wait.

What a delay costs

Contributions not paid on the due date are increased by 2% per month or part of a month of delay (article 208).

Example. Sotuba Plastiques does not pay the XOF 1,800,000 of pension contributions for March and settles three months late.

Monthly surcharge: 1,800,000 × 2% = XOF 36,000

Three months late: 36,000 × 3 = XOF 108,000

Amount to pay: 1,800,000 + 108,000 = XOF 1,908,000

Surcharges may be reduced in cases of good faith or force majeure, by a reasoned decision of the Amicable Appeals Committee (article 209). An employer that does not provide its quarterly nominative statements also faces a fine of XOF 30,000 per statement if it employs more than nine people, and XOF 45,000 if it employs more than one hundred (article 210).

The employer share can wait, at the cost of a surcharge. The employee share, never.

What you need to do

• Pay the withheld amounts to the INPS at each due date, even when cash is tight.
• Meet the deadline of the 15th of the month, or the 15th of the quarter for fewer than ten employees.
• Send the nominative statements every quarter, even if contributions are unpaid.

4. Keeping the withheld contribution: what the law has in store for the employer

Keeping the employee share deducted from wages is not a mere delay: it is a criminal offence. Employers who do not pay over the employee contribution are liable before the criminal courts for retaining withheld sums (Social Security Code, article 214). An employer that has unduly retained the withheld pension contribution is punished by a fine of XOF 20,000 and, for a repeat offence, a fine of XOF 75,000 to 200,000 and imprisonment of six days to three months, or one of these two penalties (article 239).

Before the offence is recorded, the INPS must send a written formal notice, meaning an order to regularise within a given time, in the employer’s register or by registered letter (article 215).

What employees also risk

The INPS may recover from a late employer the amount of benefits paid to its employees during periods not covered by contributions, without this exempting it from paying those contributions (article 213). And it may use all legal means to obtain payment.

The mistake not to make

Thinking that the employee share can be used to pay other debts in the meantime. In the eyes of the law, this money is only passing through the company.

What you need to do

• Set aside each month, as soon as payroll is run, the amount withheld to be paid over.
• Respond without delay to any formal notice from the INPS.
• Refer the matter to the Amicable Appeals Committee if a delay results from force majeure.

5. A closer look: declare every employee from the date of hiring

Every employer must report each hiring and each departure to the INPS within eight days, by means of a movement declaration (Social Security Code, article 163). Failing that, the INPS may charge it with the cost of benefits paid to the undeclared employee (article 165).

On the payroll side, the payslip must show the pension contributions withheld (Labour Code, article L.105). This is proof, for the employee, that their share has been deducted, and for the company, that it must pay it over. See our article Old-age pension.

Key takeaways in 5 points

• Remember that the employee share represents 40% of the pension contribution rate, and that it belongs to the employee.
• Pay the withheld amounts to the INPS at each due date, even when you cannot pay the employer share.
• Pay within the first fifteen days of the month, or of the quarter if you have fewer than ten employees.
• Measure the risk: a 2% surcharge per month of delay and criminal proceedings for retaining withheld sums.
• Declare every hiring and every departure to the INPS within eight days.