Nigeria: Revised regulation on administration of retirement and “terminal” benefits

A revised regulation on the administration of retirement and “terminal” benefits

A revised regulation on the administration of retirement and “terminal” benefits

The National Pension Commission issued a revised regulation on the administration of retirement and “terminal” benefits.

The revised regulation replaced the previous regulations for the administration of retirement and terminal benefits under the repealed Pension Reform Act (PRA), 2004, and sets out the procedures for application of the relevant sections of the PRA, 2014 to be adopted by pension fund operators for the administration of retirement and terminal benefits under the contributory pension scheme.

Significant provisions in the revised regulation include:

  • Scope and objectives: The revised regulation covers retirement savings account holders and/or beneficiaries who are employees in the private and public sectors, the federal capital territory, and states and local governments that have adopted the contributory pension scheme.
  • Rules of general application: The revised regulation provides guidelines for accessing retirement benefits by an employee / retiree on grounds of mandatory retirement, compulsory retirement, retirement on medical grounds and temporary loss of employment / disengagement.
  • Modes of accessing retirement benefits: The revised regulation provides two modes of receiving periodic retirement benefits, namely, programmed withdrawal and retiree life annuity.
  • Documentation requirements for processing benefits from retirement savings account: The revised regulation outlines the documents to be provided by retirement savings account holders when processing retirement benefits, depending on the retirement conditions.
  • Procedure for processing benefits: The revised regulation allows retirees to withdraw a lumpsum upon confirmation that the residual amount in the retirement savings account will be sufficient for programmed withdrawals or life annuity.
  • Administrative sanctions: The revised regulation imposes new administrative sanctions that empower the Commission to issue additional sanctions on defaulting boards, directors, management, or officers of pension fund administrators and pension fund contributors.

KPMG observation

The revised regulation clearly outlines procedures for accessing retirement savings account funds, and emphasizes the Commission’s commitment to upholding the rights of retirement savings account holders through improved documentation requirements and introduction of steep penalties for defaulting pension fund administrators.

It is hoped that eligible retirees will, in practice, have a seamless access to their retirement benefits as intended by the revised regulation.

Read a May 2022 report [PDF 1 MB] prepared by the KPMG member firm in Nigeria

 

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