PenCom Revises Regulation on Retirement, Terminal Benefits
(Business Africa Digest)The National Pension Commission (PenCom) recently issued a revised Regulation on Retirement and Terminal Benefits for immediate implementation..
The Revised Regulation contains several new provisions on Pension Enhancement, Voluntary Contributions, payment under the Micro Pension Plan (MPP), payment of benefits of missing persons and payment of Nigeria Social Insurance Trust Fund (NSITF) benefits. Highlights of the new provisions in the Revised Regulation are presented below.
Pension Enhancement
A new provision on pension enhancement was introduced in the Revised Regulation to take care of the issues surrounding the implementation of pension enhancement. Prior to this revision, pension enhancement under the CPS was a policy issue. However, it has now been provided that there shall be periodic pension enhancement for retirees on Programmed Withdrawal based on the Return on Investment of funds in the RSA and the Commission’s directive. Retirees with a minimum of 5 per cent growth in their RSAs, from the date of initial programming or their last enhancement date, shall be entitled to receive enhanced pensions. PFAs have been mandated to review the retirees’ data/information and determine the RSA balances as at the cut-off date. The growth in the RSA balance shall be used exclusively for pension enhancement and not for additional lump sum. Upon obtaining a “no objection” response from PenCom, a PFA shall adjust the pension of the affected retirees to reflect the enhanced pension.
Payment under Micro Pension Plan
The Revised Regulation made new provisions to address issues surrounding the payment of benefits to Micro Pension contributors. Contributions made under the MPP are segregated into contingent and fixed portions available for withdrawal and fixed for retirement, respectively. PFAs have been mandated to process requests for retirement benefits (Programmed Withdrawal or Retiree Life Annuity) and forward same to the Commission for a no objection within 2 working days of receipt of complete documentation. Note that the MPP contributor must be at least 50 years of age in order to access the fixed portion of the MPP contribution. The Revised Regulation provides that MPP retirees whose fixed portion of RSA balance cannot procure a monthly pension/annuity up to one-third of the prevailing minimum wage shall receive their benefits en bloc. En bloc payment is a one-off retirement benefit paid to a retiree whose consolidated RSA balance is below a threshold specified by PenCom from time to time.
Payment of benefits of missing persons
There is now clarity on how the benefits of missing persons should be paid.. The revised regulation provides that where an employee is missing, the employer or next of kin/legal beneficiary of the missing person shall notify the PFA of the disappearance after a minimum period of 12 months. The next of kin has to present a valid means of identification. Where the PFA is satisfied with the identity of the next of kin/legal beneficiary, documentation and verification shall commence. Upon receipt of the Missing Person Notification Report and copies of the supporting documents, PenCom shall, within ten working days, constitute a Board of Inquiry (BOI) with members drawn from the Commission, Police Criminal Investigation Department and other key stakeholders. If the BOI decides that the pension contributor is actually missing, then the process of benefits payment to the person’s next of kin/legal beneficiary shall commence.
Payment of NSITF Benefits
To address the challenges faced by employees who wish to access their Nigeria Social Insurance Trust Fund (NSITF) contributions, the Revised Regulation established conditions applicable to retirees from the private sector with NSITF benefits, which were transferred by NSITF at the implementation of the CPS. The Revised Regulation provides that any employee who retires and has NSITF contributions shall notify their PFA of their intention to withdraw the NSITF contributions. The PFA shall request the retiree to provide the necessary documents and application to access the NSITF part of their RSA balance. The PFA shall forward all requests to access the Pre-Act portion of the RSA balance to the Commission for a no objection.
Voluntary Contributions
Significantly, the revised edition also addressed issues bordering on the payment of benefits to the different categories of voluntary contributors. In line with the regulation, any RSA holder that has voluntary contributions and is eligible to access their RSA balance shall notify the PFA of their intention to withdraw the voluntary contribution with necessary documents. The PFA shall forward all requests to access the voluntary contribution portion of the RSA balance to the Commission for a no objection.
In Part III, we will continue our presentation on the key highlights of the Revised Regulation on Retirement and Terminal Benefits by discussing the administrative sanctions contained in the Regulation.
