Pension Fund Administrators (PFAs) have paid N23.96 billion to 95,830 retirees whose total pension contributions could not afford them annuity or programmed withdrawal plans.
According the National Pension Commission (PenCom) in its second quarter 2018 report, retirees whose Retirement Savings Account (RSA) balance were N550,000 or below and were considered insufficient to procure programmed withdrawal or annuity of a reasonable amount over an expected life span were allowed to exit the scheme in line with the Pension Reform Act (PRA) 2014.
PenCom maintained that the sum of N967.88 million was paid to 2,905 retirees in the second quarter 2018, of which, the breakdown revealed that 169 of them were from the federal and state governments while 2,736 from the private sector.
To ensure contributors do not exit the scheme at retirement, PenCom had initiated various measures to enhance their contributions. Prominent amongst the measures is the voluntary contributions. According PenCom, Section 1 (d) of the PRA 2014 provides to assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age.
The pension regulators which has continued to craft means to better the lives of contributors, especially in retirement, recently released a guideline to strengthen voluntary contributions. The guideline amongst other things provides that all eligible contributors who is desirous of making additional voluntary contributions shall maintain his/her existing RSA, while the new contributors shall open RSA with any PFA of their choice, into which their contributions shall be remitted as Voluntary Contributions.
“Any eligible contributor under these Guidelines, shall notify his employer in writing of his intention to make voluntary contributions and the amount to be deducted from his emoluments and remitted as Voluntary Contributions.
“Voluntary Contributions shall be made from employee’s legitimate income, which shall not be more than 1/3 of the month’s salary in line with the Labour Act, 1990,” it said.
PenCom posited that all voluntary contributions must be remitted through an employer into the RSA and that failure to deduct or remit contributions within the time stipulated in Section 11 (6) of the PRA 2014 on behalf of a contributor by an employer shall attract penalty.