The National Pension Commission (PenCom) recently issued a Public Notice informing the public of its directive to all Pension Fund Administrators (PFAs) to stop opening Death Benefit Accounts (DBA) for legal beneficiaries of deceased employees, effective 31 January 2020.
Such legal representatives have used DBA as a means to access the benefits due to deceased employees who did not open retirement savings accounts (RSAs) during their life time. However, the DBA is not recognized by the Pension Reform Act, 2014 (PRA).
Accordingly, the discontinuation of DBA is to encourage all employees to open their RSAs with any PFA of their choice while in active service, in line with Section 11(1) of the PRA. Where the employees fail to open their RSAs within 6 months after assumption of duty, Section 11(5) of the PRA mandates their employers to open RSAs with any PFA on behalf of such employees. As this would deprive the affected employees of their right to choose their PFAs, it is in their interest to comply with the law by opening their RSAs to ensure seamless access by legal representatives to the accounts in the event of their demise as provided in Section 8 of the PRA.
Please click here to download a copy of the Public Notice.
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