As a pension contributor, what benefits are available to you?

The Pension Reform Act 2014 has been structured to ensure that pension contributors have smooth process in accessing their benefits, either before retirement or upon retirement. Howeversome people have difficulty in accessing their benefits because they failed to follow the laid down rules or fail to show up for documentations early enough.

To make the process simpler for contributors, the Pension Fund Operators Association of Nigeria(PenOp) in a recent Media Retreat for journalist explained critical issues bothering payment of retirement benefits, who qualifies for benefits and at what point in the contributors life and what can be done to make the process easy and stress free.

Under the PRA 2014, A Retiree is described as a person who is 50 years or older and is retired/disengaged from active employment. It could as well be a person who is below 50 years old but retired based on the terms and conditions of his employment. So, these two set of retires are qualified to access retirement benefits.

Other categories of Retirement Savings Account holders that are eligible to make withdrawals from their retirement savings account are:Persons below 50 years who exit voluntarily or are disengaged from employment and are unable to secure another employment within 4months. In this case, the person can access 25 percent of his RSA balance.

Others are persons certified by a qualified physician to be mentally or physically incapable of carrying out the functions of his office. In this case, the person is Withdrawing on health grounds and so can access lump sum and Programmed Withdrawal or Annuity and or enblocpayment based on the total balance in his RSA account.

The Next of Kin or Administrator of a deceased personcan apply for deceased benefits.

Getting ready for retirement, the RSA holder has an important role to play, which is to update his or her information withhis chosen PFA; obtain relevant information from his employer; commence gathering of required documents; attend the Verification Exercise of the National Pension Commission the year before retirement if you are a public sector employee.

Some of the critical documents required for processing of benefits applications are highlighted:

Pay slip:

For any month within the last three months to the retirement date

Retirement letter:

The retirement letter should state the effective date of retirement and should be on the employer’s letter head.

Evidence of death of birth:

A sworn affidavit for age declaration or Birth Certificate supporting the age of the RSA holder as provided during registration.

There are common complaints while trying to access the RSA, here Jumoke Bakare of Stanbic IBTC Pension Managers provide answers to some of the questions bothering retirees and would be retirees:

I retired since 2003 but I am yet to receive my Pension from my PFA?

Answer: Persons that retired prior to July 2004 do not fall under the Contributory Pension Scheme (CPS) hence their retirement benefits should be received from the old schemes that they were part of. Also note that employees that had 3years or less to retire from the date of commencement of the Act (30 June 2004) are exempted from the contributory scheme.

Question: I need my money but my PFA is trying to frustrate me by requesting for several documents?

These documents are required to confirm the RSA holder’s eligibility, and extract information required to compute the retirement benefits accurately. There is a checklist of documents required for each application type.

I need my money but my PFA is refusing to pay my benefits?

This may be as a result of ineligibility of the client. For public sector clients – the accrued rights needs to be remitted before the client can access the benefit. The retiree is expected to attend the annual verification exercise a year before retirement

My monthly payment after the lumpsum is too small?

The Benefits Calculator template is used to determine the benefits due to an RSA holder. The four variables are inputted into the template to determine the lump sum and monthly drawdown. These variables are the Gender, Age at Retirement, RSA balance and Final Salary of the retiree. The commission is working on the guidelines for implementation of the Minimum Pension Guarantee which is an arrangement to establish a Guaranteed Minimum Pension to eligible retirees.

Delays in processing of Pension Payment, why?

Answer:This may be as a result of disparity in personal details provided at registration and retirement, incomplete or invalid documentation, delay in obtaining confirmation from employer.

The PFA is delaying the process of accessing the benefits of a deceased relative, why?

To access the benefits of a deceased RSA holder, the beneficiaries are required to present a valid will admitted to probate or a letter of administration confirming the beneficiaries under the estate of the deceased RSA holder. Upon receipt of such documents, the PFA is expected to carry out due diligence by verifying the Letters of Administration and Will at the probate successfully before the benefits can be processed. This is subject to the court /judicial processes.

For Public sector RSA holders that died in service, the beneficiaries are expected to submit Death Notification Documents. These are the documents that enable the commission to compute and remit the total benefits due to the deceased RSA holder before the beneficiaries can access the benefits.

The KEY to easy and prompt access to the benefits in the Retirement Savings Account is Regular Data Update and Documentation. The client Familiarity Index is a PenCom initiative to get all RSA holders to update their information with their PFA every three years.

Make sure there is timely processing of retirement benefits, and you will not have any difficulty accessing your benefits. Happy retirement!