PenCom sets guidelines for Micro Pension Scheme

May 14th, 2018

from Edet Udoh, Lagos

The draft guidelines for the commencement of Micro Pension Scheme in Nigeria have been released by National Pension Commission (PenCom).

The guidelines which were released to the public on May 4, 2018, by the Commission is called “Draft Guidelines for the Extension of Pension Coverage in Accordance with Section 2(3) of the PRA 2014 (Micro Pension Plan) 2018.”

The guidelines spell out the roles and responsibilities of stakeholders, operational modalities for micro pension plan, eligibility for participation, registration, contribution, investment of micro pension fund/assets, conversion, minimum requirement for participation by licensed Pension Fund Administrators (PFAs) Licensed Pension Fund Custodians (PFCs) and returns among others.

The guidelines also stated that micro pension contributors may make contributions daily, weekly, monthly or as may be convenient to them, the National Pension Commission (PenCom), has said.

PenCom stated in the guidelines for micro pension plan that the plan is opened to individuals who are 15 years and above, who have legitimate source of income and reside in Nigeria.

The pension regulator noted that every contribution made shall be split into two comprising 25 per cent for contingent withdrawal and 75 per cent for retirement benefits. It added that contributions shall be made by cash, electronically or any payment platform approved by the Central Bank of Nigeria (CBN).

PenCom maintained that contributors shall be eligible to access the portion of their contributions available for withdrawal one month after making the initial contribution, stressing that contingent withdrawal can be made anytime.

According to PenCom, a contributor may withdraw the total balance of the contingent portion of his/her Retirement Saving Account (RSA) including all accrued investment income thereto, and that payment of contingent withdrawal shall not exceed two working days.

The regulator noted that a contributor shall be eligible to access pension upon attaining the age of 50 years or on health ground in accordance with the law, adding that a contributor shall also be entitled to guaranteed minimum pension, provide they satisfy the provision of Section 84 (1) of the Pension Reform Act (PRA) 2014.

It posited that guaranteed minimum pension will be given, provided the contributor made contributions for a cumulative period of not less than 120 months and the RSA balance at retirement shall not be less than N500,000.

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