• Tuesday, June 18, 2024
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BusinessDay

Safeguarding your pension rights

Nigeria’s 20-year pension scheme gets federal lawmakers backing for consolidation of gains

As an employee working in an organisation affected by the Pension Reform Act 2014, you have the responsibility to act as a ‘gate keeper’ in nurturing and protecting your pension contributions, under the Contributory Pension Scheme (CPS).

And because you are the direct beneficiary of the scheme, your role in making sure that your employer does not only deduct from your salary a part of the pension contribution and also provides his own part, but that the money is remitted to your Pension Fund Custodians(PFC) not more than seven days after deduction.

Besides that, the employer must as a legislative requirement take a life insurance cover on your behalf, and tender the certificate of compliance to respective authorities.

National Pension Commission (PenCom), the industry regulator for pensions in Nigeria recently in an advertorial reaffirmed the rights and responsibility of the employee in overseeing the successful implementation of the Pension Reform 2014.

The advertorial with the theme “Notice to all employees on their right to life Insurance Policy and Pension Contribution” reads:

“This is to remind all employees in the public sector of the federation, Federal Capital Territory and States that have embraced the contributory Pension Scheme as well as private sector that, it is their right under Section 4(5) of the PRA 2014 to have life insurance policy taken on their behalf by their employers for an insured amount of not less than three times their annual total emolument.”

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It went further to state that, employees are also required to ensure that all pension contributions deducted from their salaries and/or contributed by their employers are remitted to the Pension Fund Custodian (PFC) by the Employer not later than seven working days from the date of payment of their salaries.

That employees are therefore advised to report to the commission (PenCom) where the employer fails to take the minimum required Insurance Policy in their favour; submit the evidence of compliance with life insurance policy to the commission and to the applicable Pension Fund Administrator (PFA) of the staff; and remit the deducted pension contributions into their Retirement Savings Accounts.

With this empowerment, the employees should rise up to the challenge to protect their right and get the best out of the nation’s pension system.

The success of the scheme is to the benefit of the individual contributor who will be better positioned to enjoy a comfortable retirement.

The objectives of the CPS was to ensure that every person who worked in either the public Service of the Federation, Federal Capital Territory, States and Local government or the Private Sector receives his retirement benefits as and when due.

It is also to assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age.

The provisions of this Act shall apply to any employment in the public service of the Federation, the public Service of the Federal Capital Territory, the Public Service of the state, the public service of the local governments and the private sector, where there are three or more employees.

Notwithstanding the provision of subsection (2) of this section, employee of organisation with less than three employees as well as self-employed persons shall be entitled to participate under the scheme in accordance with guidelines issued by the commission.

The nation’s pension industry currently swelling with N4.6trn in assets and 6.8 million registered contributors as at October 2014, has strong growth potentials to be driven by huge population, demographic advantage, positive economic par-capita and integration of the informal sector, analysts have said.

This, they said, would require that operators in the industry increase awareness enhance technology applications to increase returns on asset, strengthen capacity through mergers and acquisition to enjoy benefit of synergy and shared services.