Frequently Asked Questions

Frequently Asked Questions

WHO IS EXEMPTED FROM THE NEW PENSION SCHEME?

The 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.


HOW WILL THE NEW PENSION SCHEME HELP THE ECONOMY?

There will be a huge pool of long-term funds available for investments, which will lead to national economic development.


HOW WILL THE MONEY CONTRIBUTED BE MANAGED?

The total contributions will be paid out by the employer directly to a Pension Fund Custodian and will be managed and invested by the Pension Fund Administrator (PFA) of the employee’s choice.


WHY ESTABLISH NEW COMPANIES TO BE LICENCED AS PFAs AND PFCs?

In order to ensure the safety of pension funds and to avoid mixing pension business and other businesses, it is desirable that the operators deal with pension funds only. This will enhance effective regulation and supervision.


WHERE AN EMPLOYEE THAT HAS MORE THAN 3 YEARS TORETIRE DECIDES TO RETIRE NOW, HOW WILL HIS BENEFIT BEHANDLED?

An actuarial valuation of his/her accrued retirement benefits will be made and the amount plus his contributions to date will consist of his/her retirement benefits in his/her RSA which can only be accessed at the age of 50 years. Withdraws from the RSA will depend on the professional advice of the PFA having regard to […]


DOES AN EMPLOYEE WHO HAS 3 YEARS AND 1 MONTH TO RETIRE COME UNDER THE OLD SCHEME OR THE NEW SCHEME?

Any employee with more than 3 years to retire comes under the new pension scheme.


HOW CAN I KNOW WHAT IS HAPPENING WITH MY MONEY?

Pension Fund Administrators (PFAs) will issue regular statements of accounts and profit from investments to the employees.


HOW IS THE NEW SCHEME TO BE REGULATED?

The National Pension Commission is empowered by the Pension Reform Act 2004 to supervise and regulate new pension scheme.


WHAT IS PROGRAMMED WITHDRAWAL?

A programmed withdrawal is a method by which the employee collects his retirement benefits in periodic sums spread throughout the length of an estimated life span.


WHAT HAPPENS TO MY RSA WHEN I CHANGE JOBS?

The RSA remains with the PFA of your choice for as long as you want. You simply notify your new employer of the details of the PFA that manages your account and thereafter your contributions will be sent to the custodian of the PFA.


IS THE NEW PENSION SCHEME MANDATORY FOR ALL CATERGORIES OF EMPLOYERS AND EMPLOYEES COVERED UNDER THE ACT?

The new pension scheme is mandatory for all categories of employers and employees covered under the Pension Reform Act.


ARE PENSION CONTRIBUTIONS TAX FREE?

Contributions to the new pension scheme are tax free.


WHAT IS AN ANNUITY?

An annuity is an income purchased from an approved life insurance company which provides monthly or quarterly income to the retiree during his/her lifetime.


WHAT HAPPENS TO THE PENSION FUNDS CONTRIBUTEDUNDER THE NIGERIAN SOCIAL INSURANCE TRUST FUND(NSITF) BEFORE THE NEW PENSION SCHEME?

The pension funds contributed to the NSITF before the commencement of the new pension scheme including the income shall remain with the NSITF for a minimum period of five years from the commencement of the Pension Reform Act 2004. NSITF shall establish a company to be licensed by the National Pension Commission as a PFA […]


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