Ensuring the Right to Pension
Section 3(1) of the PRA 2014 establishes a Contributory Pension Scheme for all employments in Nigeria. The scheme guarantees the payment of retirement benefits to covered employees. It applies to employment in the Public Service, Federal Capital Territory, States, Local Governments, and the Private Sector. The PRA affirms the right of every employee covered under it to receive a pension.
Right to Employer Contributions
Section 4(1) mandates employers to contribute a minimum of 10 per cent, while employees contribute a minimum of eight per cent of their monthly emoluments to the pension scheme. The PRA defines monthly emoluments as basic salary, housing, and transport allowances. Consequently, every eligible employee has the right to the employer’s contribution, a minimum of 10% of their monthly pay.
Guaranteeing Life Insurance
Section 4(5) prescribes that every employer must maintain a Group Life Insurance Policy (GLIP) for each employee, amounting to three times the employee’s total annual emolument. This provision ensures that employees are entitled to life insurance coverage. Employers failing to fulfil their payment obligations must arrange for the settlement of claims arising from the death of any staff. Furthermore, the Revised Guidelines on GLIP for Employees, under Section 5.5, reinforce the importance of prominently displaying the GLIP certificate within employers’ premises.
Empowering Retirement Benefit Choices
Every employee covered under the PRA 2014 has the right to determine how to access their retirement benefits, whether through Programmed Withdrawal or Annuity. Section 7(1) specifies that a retirement savings account holder shall, upon retirement or upon reaching 50 years of age, choose between securing a Programmed Withdrawal or a Retiree Life Annuity. The retiree is also entitled to choose to take a lump sum or take higher periodic pension.Freedom to Choose a Pension Fund Administrator (PFA)Section 11(1) of the PRA 2014 grants employees the right to maintain an account with any Pension Fund Administrator. This provision ensures that employees can choose a PFA without interference from their employer or any third party.
Timely Remittance of Contributions
Section 11(3)(a) and (b) emphasises the right of every covered employee to timely remittance of contributions into their retirement savings account. Employers must remit employee and employer contributions no later than seven working days from the day the employee receives their salary.
Regular Information on Investment Strategy and Market Returns
Every participant in the CPS is entitled to regular updates on their PFA’s investment strategy, market returns, and performance indicators. Section 55(d) of the PRA 2014 mandates PFAs to furnish such information regularly to all RSA holders.
Accessible Customer Service Support
RSA holders are entitled to customer service support. Accordingly, all PFAs are mandated to put in place structures that facilitate easy access to services such as RSA update, 25% access due to job loss and request for RSA statements.
Guarantee of Pension and Retirement Benefits
Employees have the right to receive their pensions and other retirement benefits upon retirement. This includes lump sum disbursements, periodic pension payments, and en bloc payments as the case may be. The PRA 2014 ensures the payment of these benefits, safeguarding the financial security of retirees.
In conclusion, employees covered by the PRA 2014 are urged to observe and report any violations of these legal provisions. Regularly reviewing Retirement Savings Account (RSA) statements and reporting instances of non-remittance to the National Pension Commission (PenCom) are encouraged. Employees must verify their employers’ adherence to the Group Life Insurance Policy (GLIP).
PenCom remains steadfast in its commitment to the effective regulation and supervision of Nigeria’s pension industry.