The Pension Reform Act 2014, which establishes the Contributory Pension Scheme (CPS), recognises that the contributor could die before his or her retirement.
Therefore, who becomes the beneficiary of the pension is better determined when the contributor or Retirement Savings Account (RSA) holder is still alive for ease of assessment.
If nothing is done in preparation of this unexpected day, the contributor’s choice beneficiary may find it difficult to access the fund, or as well may not have it at the end of the day.
PRA 2014, says where an employee under the CPS dies before his/her retirement, his benefits shall be paid to his named beneficiary.
Here, many people are always confused as to whom their beneficiary is or are. Many still think that their beneficiary is their next-of-kin in the data session with their Pension Fund Administrator (PFA), but in some cases, next of kin do not necessarily mean your beneficiary, unless established in a Will or by a probate court.
The law states that where an employee dies, his entitlements under the life insurance policy maintained in this Act shall be paid by an underwriter to the named beneficiary upon receipt of a valid Will admitted to probate or a Letter of Administration, confirming the beneficiaries under the estate of the deceased employee.
It further stated that the PFA shall, with the approval of the Commission, release the amount standing in the RSA of the decease to the personal representative of the deceased, or to any other person as may be directed by a court of competent jurisdiction, in accordance with the terms of the Will or the personal law of the deceased employee, as the case may be.
Funmi Ekundayo, managing director/CEO of STL Trustees Limited said, “Most people are reluctant to discuss will writing or any form of estate planning because of the stereotype that it connotes some kind of negative emotions.”
“However, it is one of the most important ways by which people can secure the future of their loved ones,” Ekundayo said.
Ekundayo said estate planning is the process of transferring assets from one generation to the other through various legal tools such as Wills, Trusts etc.
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“Of course, no one wants to die. But the truth of the matter is that death does not give any warning. As unpleasant or as emotional as this subject matter might be, the reality is that every one that is of adult age or that has started acquiring property or that has the responsibility for other people must start thinking about it. It usually takes a lot of courage to do this but having that peace of mind that your loved ones will not have to suffer or be stranded is the reason we are having this kind of discussion,” she further explained.
Experts say, one of the challenges which families of the deceased pension contributor faces after the death of their loved one is the process of claiming his pension entitlements, making it important that a pension contributor should procure a ‘Will’ for management of his or her estate should the unexpected happen.
A will is the most practical first step in estate planning, and makes clear how you want your property to be distributed after you die. It is simply a written declaration or statement by a person (the “Testator”) naming one or more persons, human or entity, as beneficiaries of his/her property after death. Another person or persons are also named in the Will as executors of the Estate with property to be distributed after the Testator’s death.
Writing a will can be as simple as typing out how you want your assets to be transferred to loved ones or charitable organizations after your death.
If you do not have a will when you die, your estate will be handled in probate, and your property could be distributed differently than what you would like.
