What is the Pension Reform Act 2004 about?
It is a contributory, fully funded, and privately managed pension scheme that is based on individual accounts. It has been designed to ensure that benefits are paid to all retired workers. Its unique features include a mandatory contribution by employers and employees and the separation of pension administration/management from custody. This separation minimizes the possibility of mismanagement and fraud by operators, as Pension Fund Administrators (PFA) and Pension Fund Custodians (PFC) cannot be related. Furthermore, a new government body (PenCom) has been set up to effectively regulate and supervise all operators in the pension industry.
What do I stand to gain from the Contributory Pension Scheme under the Pension Reform Act 2004 ("the Act")?
It is a safe, contributory, fully funded, and privately managed pension scheme that is based on individual accounts which allows you to save enough money for retirement and have a means of livelihood even after retirement.
Does the New Scheme affect every worker in Nigeria?
No. Apart from Judicial officers and existing pensioners, the New Scheme affects all other employees in the Federal and State Public Services, the FCT and the private sector with 5 or more employees. It is however voluntary for other categories of employees.
Can my employer force me to use a PFA of its choice?
No. You have a right to choose a PFA although responsible employers may offer advice and guidance to their staff.
Can I transfer funds from one PFA to another?
Yes. Employees can change their PFA at least once a year in accordance with a transfer guideline to be released by the National Pension Commission.
How much do I get charged by a PFA?
PenCom regulates fees & tariffs that PFAs charge for their services and this is usually displayed on the statements of account.
What is the Government's role?
The Government's role is confined to that of ensuring a successful pension industry by setting up the Regulator - National Pension Commission ("PenCom").
What are some of PenCom’s functions?
Pencom (The National Pension Commission) has the
following functions:
- Regulate and supervise pension schemes
- Formulate, direct and oversee pension affairs in Nigeria
- Approve, license and supervise PFAs and PFCs
- Maintain a National Databank on Pension matters
- Receive and investigate complaints against PFAs, PFCs and employers
What ensures the safety of my contributions?
The separation of investment administration and management from custody is global best practice. This minimizes the possibility of mismanagement and fraud by operators, as PFA & PFC cannot be related. Custodians are required to separate pension assets from their own assets to eliminate commingling of funds. Furthermore, PenCom will also effectively regulate and supervise all operators in the pension industry.
Can I use my RSA as collateral for a loan?
No. You cannot use your RSA as collateral to obtain a loan.
Can I make contributions from Overseas?
Yes. By making voluntary contributions and if the offshore pension regulator permits such transfer of funds.
Can organisations with less than 5 people participate?
Yes. But participation is optional for these categories of employees so long as your employer is duly registered with the Corporate Affairs Commission.
What happens when there is a change of government?
The Pension Reform Act 2004 is a legislation passed by the National Assembly and endorsed by the President of the Federal Republic of Nigeria. A change of government should not affect the law unless it is specifically repealed and/or amended by a majority of the members of the National Assembly.
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What is the tax implication on contributions under the Act?
Contributions under the Act are tax deductible under income tax law for both employers and employees. The retirement benefit is also not taxable.
Where my employer fails to make monthly remittances for me what can I do?
The National Pension Commission has an enforcement task force responsible for ensuring that such employers are sanctioned. Cases like that should therefore be brought to their notice either directly or through your PFA.
How do I monitor my contributions?
Every employee opens a Retirement Savings Account ("RSA") with a PFA of his/her choice. The PFA is responsible for issuing periodic statements of account showing how much has been contributed as well as returns on investment generated from the contributions. Stanbic IBTC Pensions also sends Transaction Notification Service ('TNS') whenever there is a transaction on your RSA.
What happens to my RSA and contributions when I change employers?
Your RSA remains with you for life and a change of employers does not affect your account. However, you will have to notify a new employer of the PFA that manages your RSA with your details and the PFC account number. The new employer will then continue to remit your contributions to your RSA.
What happens to contributions made under the Nigeria Social Insurance Trust Fund ("NSITF")?
The Pension Reform Act 2004 which governs the treatment of contributions made to NSITF, provides that the transfer of assets from NSITF to Pension Fund Administrators (“PFAs”) will commence from July 2009 (Section 42(2)(3) which is 5years after the Act commenced. Contributors are therefore required to submit through their PFA: their Original NSITF Certificate, a means of identification and complete an NSITF transfer application form which can be downloaded from our website: www.stanbicibtcpension.com. Where there is no original certificate; the member would provide the following alongside the application form to the PFA;
- For contributors who have lost their NSITF certificates, they should provide a sworn court affidavit, in addition to a letter of indemnity from the employer and a letter confirming the identity of the contributor also from the employer.
- Contributors that were never issued NSITF certificates should provide a letter of indemnity and a confirmation letter, both from the employer.
What ensures the safety of my contributions?
The separation of investment administration and management from custody is global best practice. This minimizes the possibility of mismanagement and fraud by operators, as PFA & PFC cannot be related. Custodians are required to separate pension assets from their own assets to eliminate commingling of funds. Furthermore, PenCom will also effectively regulate and supervise all operators in the pension industry.
Can I make contributions from Overseas?
Yes. By making voluntary contributions and if the offshore pension regulator permits such transfer of funds.
How can I make additional contributions into my account:
Such additional contributions are called Voluntary Contributions and it is possible for an employee to make such contributions alongside the mandatory contributions through his/her employer.
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How can I access my funds when I retire?
Kindly contact your PFA and notify them of your retirement/disengagement, your PFA shall in turn advise you on what mode of payment is available to you and the necessary documents to submit in order to enable you make any withdrawal from your account.
When can I access my benefits under the New Scheme?
At age 50 or upon retirement, whichever is later.
Can I take all my money at once when I retire?
A retiree who is 50 years and above, whose consolidated Retirement Savings Account (RSA) balance is N500,000.00 or below, shall have the balance paid to him/her en bloc since it may not be feasible to commit the balance to programmed withdrawal. However, for others above 50 years with RSA balances in excess of N500,000.00, a minimum lump sum withdrawal of 25% is allowed and the maximum is subject to a formula that ensures that what is left is sufficient to procure an annuity from a Life Insurance Company or fund a programmed withdrawal that will generate at least 50% of your last salary at retirement on a monthly or quarterly basis for your expected life span. Both modes of withdrawal are subject to approval by the National Pension Commission.
What happens to my contribution when I die?
Your entitlements will be paid to your beneficiary under a Will OR the spouse and children of the deceased OR in the absence of a spouse and child, to the recorded next-of-kin OR any person designated by you during your life time OR in the absence of such designation, to any person appointed by the Probate Registry as the administrator of your estate. If the RSA holder dies intestate, the NOK is expected to provide Letters of Administration alongside other documents that would be advised by the PFA
Who will pay me when I retire?
The PFA will instruct its PFC to make payments to you upon retirement from your RSA as specified in the Act and on a basis agreed with you under a programmed withdrawal. Under an annuity arrangement, payments will come from the insurance company.
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RSA Account Login 
