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Trustfund’s processes and operations conform with
the best international practices, and are supported
by Accenture, a leading international consulting company,
and Sonda of Chile, a foremost IT solution provider
in the pension fund industry. It is worthy of note that
modern contributory pension saving scheme originated
in Chile, which maintains one of the best managed pension
schemes worldwide.
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THE PENSION REFORM ACT 2004
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Signed into law on 25th June, 2004
Objectives of The Act:
- To ensure that every employee receives retirement benefits as and when due.
- To institute a mandatory culture of saving among workers.
- To establish a uniform set of rules, regulations and standards for the administration of pension funds.
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Highlights of the Act:
- Covers employees in the federal public sector, the Federal Capital territory, and organizations in the private sector employing 5 or more employees.
- Employees with 3 years to retire (between 2004 and 2007) are exempted.
- Is a contributory pension scheme and therefore fully funded.
- Introduced private sector management of pension funds by Pension Fund Administrators (PFA) and Pension Fund Custodians (PFC)
- Employees to open a Retirement Savings Account (RSA) with a PFA of their choice.
- Introduction of regulatory agency – the National Pension Commission (PenCom) for the regulation and supervision of pension matters in Nigeria.
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New Industry Structure.
During employment
- Employee opens retirement savings account (RSA)
- Employee’s contribution is deducted ( 7.5%; 2.5% by military personnel)
- Employer adds own contribution (7.5% ; 12.5% by the Military)
- Total contribution is remitted by the employer to a Custodian chosen by the employee’s PFA.
- Custodian notifies PFA of funds received
- PFA credits employee’s Retirement Savings Account
Pension Fund Administrator instructs Custodian on investments to make.
Custodian implements PFA’s instructions and keeps instruments in its custody.
PFA prepares account and sends statement to employee/contributor quarterly
On retirement:
- Employee notifies PFA of retirement
- PFA advises employee of possible options (annuity, programmed withdrawal, lump sum withdrawal)
- Employee selects one or more option (s)
- PFA implements
- Employee gets monthly/quarterly pension payments
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More About the Pension Reform Act >>> |
PAST GRATUITIES AND PENSIONS |
Public Sector Employees
- In the federal civil service, Federal Govt. to give bond to each employee in respect of gratuity and pension benefits accrued before the commencement of the Act.
- Value of the bond to be transferred to the employee’s PFA and credited to the employee’s Retirement Savings Account (RSA).
- Deductions since the enactment of the Act would be transferred to the PFA chosen by the individual employee.
Private Sector Employees
- Each employee to be credited with pension benefits accrued before the enactment of the Act, and to be given a bond by the employer for unfunded pension. The value of the bonds to be transferred to the employee’s PFA and credited to employee’s retirement savings account.
- Employers to transfer deductions made since the commencement of the Act to the PFA chosen by the employee.
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