What is this new scheme?
The new scheme is a contributory, fully funded, privately managed pension scheme that is based on individual accounts. It ensures that everyone who has worked receives his retirement benefits as and when due.
How much will I need to contribute?
A minimum of 8% of your monthly basic salary, housing and transport allowances.
What happens to my account when I change jobs?
Nothing happens. The accounts are portable and will remain with you for life. You simply notify your new employer of the PFA that manages your account and thereafter your contributions will be sent to its Custodian.
What is a Pension Assets Custodian?
The Pension Assets Custodian is an entity licensed by the National Pension Commission to hold pension assets in safe custody.
What minimum financial resources must a Pension Assets Custodian possess?
An applicant Custodian must be a licensed financial institution with a minimum net worth of N5,000,000,000 unimpaired by losses and has a total assets of N125,000,000,000 or is wholly owned by a licensed financial institution with similar financial resources. This is to ensure the safety of the funds considering the huge amount of funds to be warehoused by the Custodians.
What is a Pension Fund Administrator?
A Pension Fund Administrator is an entity licensed by the National Pension Commission (Commission) and charged with the responsibility of managing and investing the pension funds. Each employee is free to choose a PFA.
Who can I complain to if I am not satisfied?
Our website offers website feedback/ whistle blowing. Any complaints with PFA’s should be addressed to their website or to National Pension Commission.
What is the difference between a PFA and a custodian?
The PFA manages the pension funds and decides which kind of investments to make while the Custodian holds the pension funds assets and acts to the order of the PFA.
How much will my employer contribute?
A minimum of 10% of your monthly basic salary, housing and transport allowances. However, the employer may elect to bear the full burden of the scheme provided that the total contribution shall not be less than fifteen percent of the monthly basic salary, housing and transport allowances of the employee.
Are pension contributions paid to the PFA?
No. The employer sends his contribution as well as the employees contribution directly to the Custodian.
Can I switch PFAs?
Yes. The employee has the freedom to, not more than once a year, transfer his/her Retirement Savings Account (RSA) from one PFA to another.
How do I know which PFA to choose?
The Commission will have a schedule of all licensed PFAs, which will be made available to the public.
What is the role of the government?
The government has set up a specialist Regulator of pension schemes and appointed the members of the board of the Regulator. Government will not temper with the savings, as it will not have access to them. In fact, the Government shall be primarily concerned with ensuring the safety of the savings through the establishment of the Commission.
What are the traditional roles of Pension Fund Custodians?
It is custodians who are tasked with keeping hold of pension funds’ assets – the stocks and shares, bonds and cash – and keeping track of how much those assets are worth, as well as arranging the transfer of assets when investment managers make decisions.
What is an annuity?
An annuity is an income purchased from a licensed life insurance company approved by the Commission with monthly or quarterly payments during the lifetime of a retiree.?
What will happen to the contribution?
The total contribution will be paid out by the employer directly to a Pension Assets Custodian (PAC) and will be managed and invested by the Pension Fund Administrator (PFA), of the employees’ choice.
Can I withdraw any portion of it?
Yes, upon the later of either retirement or reaching the age of 50, and then only to the extent that what is left is sufficient to guarantee that at least 50% of your last salary will be paid to you monthly through an annuity or a programmed withdrawal. If an employee retires before the age of 50 years in accordance with the terms and conditions of his employment, he or she may withdraw a lump sum of money not more than 25% of the amount standing to his credit of RSA provided that such withdrawals shall only be made after six months of retirement and the retired employee does not secure another employment.
What happens to the balance?
The balance is used to procure an annuity or fund a programmed withdrawal.