How PFAs’ new service delivery will expose defaulting employers
A new communication pattern by Pension Fund Administrators (PFAs) aimed at carrying its Retirement Savings Account (RSA) holders along in understanding details of their account is about to expose employers that exploit their workers in level of contributions.
The communication pattern, which will enable RSA holders to know their pension status at any given time, will also unveil how much their employers are contributing to the purse, and whether it is in compliance with the Pension Reform Act.
The Pension Reform Act 2014, which replaced the Pension Reform Act 2004 Act, among other changes increased the rate of contribution to a minimum of 10 percent by the employer and a minimum of 8 percent by the employee.
One of the leading PFAs in Nigeria, and perhaps the largest in terms of assets under management, Stanbic IBTC Pensions Managers, has set the pace and will this month give its RSA holders across the public and private sectors the full status of their contributions.
A message sent to its RSA holders read: “Dear Client, Effective this month, we will update your contribution notification to include Retirement Savings Account (RSA), Pension Balance (BAL), Employer Contribution (ER), Employee Contribution (EE) and Voluntary Contribution (VC).”
This implies a monthly update, which PFAs give their RSA holders as part of the service level standards set by the industry regulator, the National Pension Commission (PenCom).
Industry analysts say the essence of this is for the RSA holders to actually know what makes up their monthly contributions, where they are in terms of their retirement plans, and if they could increase their contribution may be by voluntary contributions.
According to the analysts, some employers who reluctantly enrolled their workers in the scheme remit only employees’ portion without the portion of the employer, which should have been 10 percent of the employees’ emolument.
I think this will expose them, and also it will be an opportunity to make amends as the law stipulates, an analyst says.
Olumide Oyetan, the chief executive, Stanbic IBTC Pension Managers, states that in order to service its contributors better, the company has carried out a significant number of upgrades across its digital self-service channels as well as online platforms to provide transactional ease and a personalised experience for both existing clients and new joiners.
Oyetan also notes that within the organisation, it has also conducted in-house evaluations and re-trainings for staff to equip them with the required skills that will enable them to serve customers better.
Meanwhile, as of April 30, 2021, the industry’s total pension assets under management have grown to N12.398 trillion, with 9.328 million registered contributors under the Contributory Pension Scheme.
The objectives of this scheme are 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; and 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.
In the case of the private sector, the scheme shall apply to employees who are in the employment of an organisation in which there are three or more employees.
Notwithstanding the provision of Subsection (2) of this Section, employees of organisations 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.