Frequently Asked Questions

Frequently Asked Questions

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 […]


IS THE PRIVATE SECTOR PENSION BEING MERGED WITH THE PUBLIC SECTOR?

There is no merger of private sector pension with that of the public sector pension since the sources of funding are not the same. However, both are now being regulated under the same rules and regulations.


WILL TAX BE PAID ON THE PROFIT MADE FROM TRADING WITH THE MONEY IN THE RETIREMENT SAVINGS ACCOUNT (RSA)?

No. Section 10(2) of the Pension Reform Act (PRA) 2014 exempts from tax all interests, dividends, profits, investment and other income accruable to pension funds and assets.


WHO IS A PENSION FUND ADMINISTRATOR (PFA)?

A Pension Fund Administrator (PFA) is a company licensed by the National Pension Commission to manage and invest the pension funds in the employee’s Retirement Savings Account (RSA).


WHAT HAPPENS WHEN AN EMPLOYEE WHO HAS BEEN CONTRIBUTING UNDER THE NEW SCHEME DIES BEFORE HIS RETIREMENT?

Where an employee who has been contributing under the new pension scheme dies before his/her retirement, his retirement benefits shall be paid to his beneficiary under a will or the spouse and children of the deceased or in the absence of a wife and child, to the recorded nextof-kin or any person designated by him […]


CAN A CONTRIBUTOR MOVE HIS CONTRIBUTIONS UNDERNSITF TO ANOTHER PFA?

A contributor or beneficiary under NSITF Act can only move his pension contributions under NSITF to another PFA after a period of 5 years from the date of commencement of the Pension Reform Act 2004.


WHAT IS THE MAIN OBJECTIVE OF THE NEW PENSION SCHEME?

One of the main objectives of the pension reform is to ensure that every person that worked in either the public or private sector in Nigeria receives his/her retirement benefits as and when due.


HOW WILL I BENEFIT FROM THE NEW PENSION SCHEME?

The new pension scheme will ensure that you receive your pension after retirement without any delay.


HOW DO I KNOW WHICH PFA TO CHOOSE?

The National Pension Commission will publish a list of all licensed PFAs and make it available to the public.


WHAT HAPPENS TO THE BALANCE IN THE RSA AFTER ANY INITIAL LUMP SUM WITHDRAWAL?

The balance in the RSA will be used to procure an annuity that provides regular income to the contributor or fund a programmed withdrawal.


CAN NSITF STILL HANDLE PENSION MATTERS UNDER THENEW PENSION SCHEME?

NSITF will only handle pension matters of existing pensioners and those exempted by the Act who have contributed to the NSITF under the supervision of the National Pension Commission.


HOW IS THE NEW PENSION SCHEME DIFFERENT FROM THE OLD PENSION SCHEME?

Most of the old pension schemes were not fully funded. Therefore, upon retirement, there were no ready funds to pay the pensioners. The new pension scheme is fully funded. Money is contributed into individual employee’s Retirement Savings Account (RSA) and when he/she retires, there will be money in his/her RSA to pay his pension.


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