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Pension Reform Act 2004 Overview
The objectives of the scheme are;
To ensure that every worker receives his/her retirement benefits as and when due;
Assist workers to save in order to cater for their livelihood during old age so as to reduce old age poverty.
Establish a system that is financially sustainable, simple & transparent; safeguards pension assets and promotes savings.
Features of the Scheme
The scheme is contributory with minimum employer and employee contribution of 7.5% each of basic salary, transport and housing allowance. Contribution for the Military however is employer (12.5%) and employee (2.5%).
Contributions are credited into individual Retirement Savings Account (RSA) specifically opened with the PFA
Privately managed by the Pension Fund Administrator (PFA), all Investment Returns accrue to the Contributor via the Retirement Savings Account (RSA).
Third party custody of pension assets by Pension Fund Custodian (PFC) to safeguard contributions.
Strictly regulated and supervised by the National Pension Commission (PENCOM)
A Life Insurance Policy is to be taken out by employers for amounts not less than three times annual total emolument.
In the event of Death, Life Insurance Proceeds are paid into RSA and applied in favour of the Beneficiary under a Will or letters of administration.
Eligibility to withdraw benefits from the scheme is upon retirement or attaining the age of 50 years, whichever is later. Account holders can however withdraw before age 50, if he/she is retired on medical grounds; or retires in accordance with the terms and conditions of his employment. Designated beneficiaries to the estate may also request for payments upon death of an RSA account holder.
