Lack of adequate knowledge about the workings of the Contributory Pension Scheme, introduced by the Federal Government following the enactment of the Pension Reform Acts ( PRA) 2004 by the working population in the country, among other issues, remains a major challenge to the development of the scheme. OMOBOLA TOLU-KUSIMO reports
Do you work in the private or public sector? If yes; have you ever imagined a future without legitimate retirement plan?
In Nigeria, for you to benefit from a legitimate retirement plan, there are steps that must be taken by the employee and the employer.
Following the enactment of the Pension reform Act, 2004 in the country, the Contributory Pension Scheme (CPS) was introduced by the Federal Government and is aimed at bringing succour to the Nigerian retirees. The CPS ensures that everyone who has worked receives his or her retirement benefits as and when due and are able to contribute to economic developments of the country.
The new pension scheme covers all employees in both public and the private sector of the economy and is mandatory for all categories of employers and employees covered under the Pension Reform Act.
Under the scheme, an employee shall make monthly contributions of a minimum of 7.5 percent of the total of his or her monthly emoluments (i.e., monthly basic salary, transport allowance and housing allowance into his RSA while the employer shall contribute a minimum of 7.5 percent of the employee’s monthly emoluments towards the retirement benefits of the employee.
Similarly, an employer can make all the contributions on behalf of the employee without making any deduction from the employee’s salary except that such contribution by the employer shall not be less than 15 percent of the monthly emoluments of the employee.
An employee’ contributions are just savings out of your emoluments towards your old age and the employer’s contributions will only increase such savings. Meanwhile, existing pensioners, employees who have 3 years or less to retire and the categories of persons covered by the provisions of section 291 of the Constitution of Federal Republic of Nigeria 1999 are exempted from the new pension scheme.
However, for you to be fully covered or remain covered till your retirement period as an employee in either the public or private sector there is need to always check on your employer and understand how the CPS works.
An employee also has a responsibility to blow the whistle on his or employer as failure to do so may lead to non-remittance of his or her pension deductions.
PenCom has said lack of adequate knowledge about the workings of the CPS among other issues forms major challenges of the scheme.
According to the regulatory body for pension and retirement benefits management in the country, National Pension Commission (PenCom), the CPS is more reliable than the Defined Benefit Scheme as fund is set aside by both the employer and employee to fully meet future retirement benefits.
Managing Director, Legacy Pension Managers, Mr. Misbahu Yola while speaking at the just concluded workshop organised by the commission for business Editors and Finance, Insurance and Labour Correspondent in Abuja on the roles of Employees, Employees, Pension Fund Administration (PFA), Pension Fund Custodians (PFCs) and PenCom said roles of employees include enrolment with a PFA of choice, submission of RSA to employer for onward funding of RSA.
He explained that the employers are to ensure employees enrol with PFAs and make monthly pension remittances to PFAs.
“Roles of PFA’s are enrolments, collections, investment and benefit administration, roles of PFC are collections, assets custody and benefit administration while PenCom is to regulate the operators, set the rules and guidelines for all aspects and make remittances of some selected Ministries, Departments and Agencies”.
Yola stated further that the role of retiree and prospective retiree in the public sector are timely attendance of verification and enrolment exercise conducted by PenCom for impending retirees of the federal government.
“Their employers are to ensure timely submission of nominal roll to PenCom for accurate determination of employee benefits especially in cases of promotions after verification and provide PFA with copies of retirement notice and necessary documents for updating registration details and any possible change of Next of Kin.
“In the private sector, retirees are to produce original copy of remittance status letter showing that all remittances have been made to the PFA and other statutory documents.
He noted that documents required to access benefits are duly completed legacy notice of retirement form, duly completed indemnity form in the case of public sector, duly completed programmed withdrawal agreement form’ PenCom verification slip for public sector only, bank confirmation of account among others.
He added that PFAs are to contact employees six month before retirement, notify employee of types of documentation required and advise on various modes of withdrawal from RSA. Head, Research and Corporate Strategy, PenCom, Dr. Farouk Aminu in a paper presentation on developments in the pension industry revealed that the commission has challenges in implementing the CPS.
He said, “The challenges are lack of adequate knowledge about the workings of the CPS, multiple registrations and lack of clear identification of Retirement Savings Account (RSA) holders, delays in remittance of contributions occasioned by non-submission of nominal rolls by the MDAs, low level of monthly pension and periodic review of pension”.
Head Compliance and Enforcement Department, PenCom, Mr. M. B. Umar on his part said cases of non-remittance of pension deductions by employers of labour being taken seriously by the commission. He enjoined employees to expose any employer who fail to remit deducted funds from their salaries to necessary Pension Fund Administrators (PFA) to the commission
He disclosed that the commission will continue to prosecute defaulters with a view to bringing sanity into the system.
As a precursor, the Director-General of PenCom, Mohammed Kabir Ahmed, said over 200 companies in the banking, oil and gas industries, as well as hospitals and media organisations have been audited.
Ahmed said that in order to make the new pension scheme more vibrant and meet the expectations of Nigerians, the commission is currently discussing with the Attorney General of the Federation to make laws that would empower it to prosecute defaulters in all the states of the federation.
“Due to the frequent report cases of non-remittance of pension deductions by employers of labour, the Pension Commission (PenCom) will soon start prosecuting defaulters, to ensure that the scheme meet its expected goals,” Ahmed said.
Great stuff.Id like to recommend checking out such as something like cheeseburger. What do you think?
Hey man, was just browsing through the internet looking for some information and came across your blog. I am impressed by the information that you have on this blog. It shows how well you understand this subject. Bookmarked this page, will come back for more. You, my friend, ROCK!!!
Your email address will not be published. Required fields are marked *
National Mirror @ 4 Photos
Boko Haram: Why military can’t win the war- Prof Nwolise
National Mirror ranks among the best in the country-Sambo
2015: DON CALLS FOR SPIRITUAL WARFARE AGAINST BOKO HARAM
Enter your email address:
Delivered by FeedBurner
2015 National Mirror. Powered By Zero-One