Pension contributions are paid directly to the PFC to be held on the order of the PFA.
It is the duty of the PFAs to administer the contributions and invest in such a way that will ensure safe and reasonable returns on investment. The reserve fund created by the PFAs under the Act would compensate for any erosion of the value of the contributions.
A Pension Fund Custodian (PFC) is a company licensed by the National Pension Commission to keep pension money and assets in the RSA on trust for the employee on behalf of the PFA.
Employee’s right to accrued retirement benefits for the previous years he/she has been in employment is guaranteed by the Pension Reform Act 2004. In the case of the public service of the Federation and the Federal Capital Territory, where pension scheme was unfunded, the right would be acknowledged through the issuance of a ‘Federal Government […]
A fully funded pension scheme exists where pension funds and assets match pension liabilities at any given time.
Under the Pension Reform Act 2004 a person can voluntarily retire or be compulsorily retired before the age of 50 years on the ground of medical advice, permanent disability or due to particular terms and conditions of employment. If any person retires under any of the foregoing circumstances, he is entitled to withdraw from his […]
The PFA manages and invests the pension funds while the PFC keeps the pension funds and assets in safe custody and carries out transactions on behalf of the PFA.
The Federal Government has established a Retirement Benefits Bond Redemption Fund Account in the Central Bank of Nigeria. The Federal Government is already making a monthly payment into the Fund of an amount equal to 5% of the total monthly wage bill payable to all employees of the Federal Government and the Federal Capital Territory.
Every employee or contributor under the new pension scheme is expected to open RSA in his/her name with a PFA of his/her choice into which all his/her contributions and returns on investment are paid.
The minimum pension guarantee shall be determined from time to time by the National Pension Commission.
An applicant PFA must have a minimum paid up share capital of N150,000,000 while an applicant PFC must have a minimum paid up capital of N2,000,000,000 and shall be a licensed financial institution with a minimum net worth of N5,000,000,000 unimpaired by losses and has total assets of N125,000,000,000 or is wholly owned by a […]
In the case of funded pension schemes in the public service of the Federation and the private sector, employers shall undertake actuarial valuation of the employee’s accrued benefits and credit the Retirement Savings Accounts (RSAs) of its employees with such funds and in the event of any deficiency, the shortfall shall become a debt and […]
This new pension scheme is contributory, fully funded, privately managed, third party custody of the funds and assets and based on individual accounts. It ensures that everyone who has worked receives his/her retirement benefits as and when due.
The RSA is similar to a bank account except that no contributor can withdraw money from the RSA before his/her retirement. The PFA is required to invest the money and issue statements of account at least once every quarter to the contributor.