INTRODUCTION
Pension is part of the money paid for your work and time, to which you have limited or restricted access, whereas your fund managers can do business with it, and give you a fraction of the profit.
- Kayode Adeniji Esq. (2022)
I. HOW MUCH DO YOU KNOW ABOUT PENSION FUNDS?
All the necessary information you need to know with respect to your retirement savings as a pensioner are available on the PenCom website (pencom.gov.ng) and the official websites of the various PFAs. In addition, you as an employee may garner more information by studying the Pension Reform Act of 2014. It is the most recent legislation on the contributory pension scheme (CPS) in Nigeria. The Act provides for the percentage to be deducted from your salary, your employer’s quota to the scheme, who collects and invests these monies etc.
Unfortunately, the average Nigerian is illiterate and not technology savvy. As a senior citizen and a pensioner, it is the duty of PenCom to sensitize you on how to access your funds post-retirement, as well as how to access a fraction of your pension funds prior to attaining the retirement age of fifty (50) years. The world as we know it now, has evolved beyond heavy reliance on paper documentation while the current processes have now been digitalized. We now have electronic mails, virtual meetings, electronic transfers etc.
PenCom needs to sensitize the people that fall into this category in order to ensure that everyone is carried along and brought up to speed with these changes. Pension is insurance for old age and security for the future. What obtains theoretically should also be the case realistically. The process for withdrawal should be simpler and easier for you beneficiaries. There should also be transparency at all levels.
II. DO YOU TRUST PENSION FUNDS MANAGERS/ADMINISTRATORS?
It is trite law that as an employee, you are entitled to choose any PFA of your choice. You must be proactive to inform your employer promptly and accordingly. Also, depending on your chosen PFA, you are entitled to have direct link with your account managers through the phone numbers displayed on their official website. Thanks to technology, you can now view your RSA balance, statements, get reports on how your monies are being invested and even a percentage of the accrued interests.
The issue of trust arises where there are discrepancies with regards to the amount remitted to the RSAs of contributors to the scheme as opposed to what was deducted by employers. There have been instances where this has been recorded. If you are an aggrieved pensioner, you may approach your PFA for a reconciliation of account. An employer in breach of remittance of monthly quota to PFCs, having made the necessary deductions will be penalized by PenCom on behalf of the pensioner if the remittance are not made.
III. DO YOU KNOW HOW YOUR PENSION FUNDS ARE INVESTED?
Firstly, it has been established that contributions made by employers are collected by the PFCs, while the PFAs manage and invest the funds collected. PFAs are authorized to invest in bonds, treasury bills, and other securities issued by the Federal government, State and Local governments. They may also invest in real estate development opportunities, bank securities, debentures, redeemable preference shares and other instruments issued by corporate entities listed on the Nigerian Stock Exchange (NSE) registered under the Investment and Securities Act (Section 86 PRA 2014).
On average, you may not be adequately informed on how the monies deducted from your salaries in the name of pension are invested. The few pensioners that are aware have a certain level of exposure. When they remit their quota monthly, PFAs invest in any of the options highlighted above and in turn credit the retirement savings account (RSA) of beneficiaries.
IV. HOW EASY IS THE WITHDRAWAL PROCESS?
Withdrawals from your Retirement Saving Account (RSA) can only be made upon retirement. However, where you as an employee make additional or voluntary lump sum contributions into the RSA, you can withdraw such money before retirement or attainment of the age of 50 years.
Section 7(2) of the Pension Reform Act provides that, where you as an employee retires, disengages or are disengaged from our employment, you are entitled to an amount not more than 25% of the total RSA. However, this withdrawal is subject to the approval of the National Pension Commission (PenCom), provided that such withdrawal shall be made four months after your retirement or disengagement from your employment.
Here are the steps required to access your pension funds;
a. Present to your PFA the Letter of Termination of Appointment issued by your employer or Letter of Resignation.
b. Present to your PFA, the payslips of the last three months of your employment.
c. Letter from you as an applicant, requesting for twenty-five (25) percent payment of the RSA balance.
d. Evidence of your accrued pension rights, if any, if you are a public sector worker.
e. Your bank statement or Letter of Introduction from the bank.
f. Your proof of age (birth certificate or sworn declaration of age).
g. Letter from your employer confirming full remittance of all contributions made to the RSA if you are a private-sector worker.
h. PenCom retiree indemnity form if you are a public sector worker.
i. Four passport photographs; and a form to be given by the PFA.
AUTHORS
- Kayode Adeniji Esq,
Senior Partner, Lawracles LP - Mercy Uwojeyah Esq.
Former Associate, Lawracles LP and Legal Advisor, Credit CLAN, a leading Fintech Company