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Frequently Asked Questions

Frequently Asked Questions

IS AN EMPLOYER IN THE PRIVATE SECTOR OPERATING ADEFINED BENEFIT SCHEME REQUIRED TO OPEN RSAs FOR HISEMPLOYEES AND CREDIT ACCRUED PENSION RIGHTS?

Any company operating a defined benefit scheme that is desirous of continuing the scheme must, in addition to satisfying other conditions specified in the Act, open RSAs so that the […]


CAN THE EMPLOYER MAKE THE TOTAL CONTRIBUTIONS ON BEHALF OF THE EMPLOYEE?

An employer can make all the contributions on behalf of the employee without making any deduction from the employee’s salary except that such contribution by the employer shall not be […]


WHAT IS THE ROLE OF THE GOVERNMENT IN THE NEW PENSION SCHEME?

The Federal Government has established the National Pension Commission and charged it with the responsibility of regulating and supervising new pension scheme.


IS IT ONLY EMPLOYEES THAT JOIN AN ORGANISATION AFTER THE COMMENCEMENT OF THE PENSION REFORM ACT THAT CAN ELECT TO OPT OUT OF A CLOSED PFA?

Every employee may decide to join the contributory pension scheme or move his RSA from a closed PFA to a PFA of his choice subject to such rules and regulations […]


SHOULD GRATUITY BE INCLUDED IN THE ACTUARIAL VALUATION FOR PURPOSES OF DETERMINING ACCRUED PENSION RIGHTS TO BE TRANSFERRED FROM THE OLD SCHEME INTO THE RSA?

If at the commencement of the Pension Reform Act 2004, the employee is entitled to gratuity (if he were to retire on that date), the gratuity shall be computed and […]


WILL THE CONTRIBUTIONS LEAD TO A DECREASE IN MY MONTHLY EMOLUMENTS?

Your contributions are just savings out of your emoluments towards your old age and the employer’s contribution will only increase such savings.


CAN THE GOVERNMENT TAKE OR USE THE MONEY IN MY RSA FOR ANY PURPOSE?

The Government cannot tamper with the pension funds in your RSA, because the Government cannot have access to the account. Besides, the Government is primarily concerned with ensuring the safety […]


CAN A NEW MULTINATIONAL COMPANY WITHOUT AN EXISTING PENSION FUND BUT WITH CAPACITY FOR FULLY FUNDED DEFINED BENEFIT PENSION SCHEME APPLY AS CLOSED PFA TO MANAGE THE PENSION OF ITS EMPLOYEES?

In accordance with the provisions of the Pension Reform Act 2004, only an employer with a pension scheme existing before the commencement of the Act can apply to be licensed […]


CAN I WITHDRAW ANY PORTION OF THE AMOUNT IN MY RSA BEFORE RETIREMENT?

Withdrawals from the RSA can only be made upon retirement. However, where an employee makes additional or voluntary lump sum contributions into the RSA, he can withdraw such money before […]


ARE PENSION CONTRIBUTIONS PAID TO THE PFA?

Pension contributions are paid directly to the PFC to be held on the order of the PFA.


WILL INFLATION AND DEVALUATION OF THE NAIRA NOT ERODE THE VALUE OF THE PENSION CONTRIBUTIONS?

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 […]


WHO IS A CUSTODIAN?

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 […]


WHAT HAPPENS TO THE RETIREMENT BENEFITS OF ANEMPLOYEE WHO IS ALREADY UNDER A PENSION SCHEMEEXISTING BEFORE THE COMMENCEMENT OF THE NEW PENSIONSCHEME?

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 […]


WHAT DOES ‘FULLY FUNDED’ PENSION SCHEME MEAN?

A fully funded pension scheme exists where pension funds and assets match pension liabilities at any given time.


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