The National Pensions Commission (PenCom) has instructed Pension Fund Administrators (PFAs) to discontinue the registration of Death Benefits Accounts (DBAs) for deceased employees under the Contributory Pension Scheme (CPS).
A public notice released by the Commission indicated that the practice of opening such accounts was in conflict with the Pension Reform Act, 2014 (PRA, 2014).
The regulator noted that Section 11(1) of the PRA 2014 mandates every eligible employee to maintain a Retirement Savings Account (RSA) with any Pension Fund Administrator.
The Act also mandates every employer to open a nominal RSA within six months of assumption of duty for the employee who fails to open an RSA in accordance with section 11(5) of the PRA 2014.
“Prior to the PRA 2014, Death Benefits Accounts (DBAs) had been used by legal beneficiaries to access the benefits of the deceased employees who did not open RSA during their lifetime. Pursuant to the above cited statutory provisions, this practice is no longer valid,” PenCom said.
Urging employers to ensure that RSAs are opened for all their employees, the regulator said, “The general public is hereby notified that the processing of DBA for death benefits claims would be discontinued with effect from 1 February, 2020.”
It directed that all PFAs have to stop the opening of DBAs with effect from 31 January, 2020.
“The National Pension Commission reiterates the need for all employees to ensure that they open RSAs with any PFA of their choice. A list of licensed PFAs can be found on the Commission’s website,” PenCom stated.