How to access your retirement benefits

The Pension Reform Act, 2014 (PRA, 2014) has spelt out how a Retirement Savings Account (RSA) holder or next of kin can access contributions accumulated over time on account of retirement, temporary loss of job, death, or even contingency purposes on voluntary contribution plan.

One of the major objectives of Pension Reform as stated in Section 1 of the  PRA, 2014 is to amongst others, ensure that every worker receives his retirement benefits as and when due.

Section 7 of the PRA 2014 provides two major modes for accessing RSA balance upon retirement: programmed withdrawal and annuity and it provides that lump sum may be collected under the two options.

Programmed monthly or quarterly withdrawals calculated on the basis of an expected life span and annuity for life purchased from a Life Insurance Company licensed by the National Insurance Commission.

Under the Contributory Pension Scheme (CPS), mandatory retirement Attainment of mandatory retirement age, generally 60 years in the public sector, retirement from service on attainment of a maximum allowable length of service, generally 35 years in the public sector.

There are exception in the academia such as the attainment of 70 years for Academic Staff in the Professorial Cadre and attainment of 65 years for non-academic staff of Tertiary Institutions.

The PRA also makes provision for retirement based on Health Grounds, temporary access to 25 per cent of RSA Balance on temporary loss of job, voluntary contribution withdrawal and payment deceased benefits.

Section 16 (2)(a) of PRA 2014 provides for retirement based on advice of a Physician/Medical Board due to total or permanent disability of body or mind. In such a situation, affected person can access RSA before attaining 50 years of age.

There are several conditions for accessing an RSA as set by the guidelines of the National Pension Commission (PenCom), and one of them is temporary loss of job, which grants beneficiary access to 25 per cent to contributions in the RSA.

Section 7(2) and 16(2)(5) PRA 2014 provides that temporary access (25%) is the benefits paid to employees who lost their jobs and have not been able to secure another job after the period of four months from disengagement.

The essence is to cushion the livelihood of the applicant, but once another employment is secured, there will be resumption of contribution and additional Funds remitted into RSA after payment of 25 per cent shall not be accessed until RSA holder attains 50 years for payment of lump sum and pension either as Programmed Withdrawal or Annuity

Note that the pension law stipulates that the 25 per cent of RSA balance can only be withdrawn once in a life time before RSA holder turns 50 years.

Under Voluntary Contributions (VC), Section 4(3) of the Pension Reform Act, 2014 allows the Contributors to voluntarily contribute in addition to the mandatory contributions into their respective Retirement Savings Account (RSA) in order to augment their pension at retirement.

Similarly, Section 4(7) allows exempted employees from CPS to participate voluntarily in the CPS.

Withdrawal of VC shall be once every 2 years from the last approved withdrawal date. Subsequent withdrawals shall only be on the incremental contributions from the date of last withdrawal

For mandatory contributors, the amount remitted as VC is separated as follows: 50 per cent shall be treated as contingent, available for withdrawal every two years and the balance of 50 per cent shall be fixed for pension and utilised at date of retirement to augment the contributor’s retirement benefit

In case of death, benefits will be paid enbloc or where part of the Components is yet to be credited into the RSA, the portion remitted would be paid pending the balance.

Proceeds of Group Life Insurance Policy being three times the annual total emoluments) are paid directly to legal beneficiary, an underwriter to a named beneficiary.

In the case of a missing person, the employer of the missing person should report immediately to the employee’s PFA, Insurer and PenCom and the employer shall advise PenCom to constitute Board of Inquiry (BOI) on the missing person.

If established, the benefits of the missing person would be paid to the estate/beneficiary of a missing person.

The Pension Act provides that for Programmed Withdrawal, retirees will be paid RSA balance, Lump sum, and monthly pension and there is a possibility of an upward periodic review of pension due to appreciable growth in the RSA.