Pencom has released guidelines for the withdrawal of pension funds in line with the provisions of the Pension Act of 2014.
This will allow Retirement Services Account (RSA) holders to make use of their pension fund balances to make acquisitions of their primary homes.
According to Chinel Anohu-Amazu, Director General of National Pension Commission, the change was made to allow for "funds to be accessed in a manner that is safe".
Currently, Nigeria’s contributory pension system is a function of the employee’s salary- 10 per cent paid by the employer and eight per cent paid by the employee.
In a recent meeting with Nigeria's President Muhammadu Buhari, Anohu-Amazu said it set out to “brief him on the pension industry as a whole and highlighting the achievements as well as bringing to the fore the challenges.”
One of the burning issues surrounding pensions in Nigeria is the payment of the accrued rights, which are pensioners who have already retired with a hybrid of this contributory pension system and accrued rights from their previous careers and the federal government, she said.
“As is typical of Mr president, as soon as the challenges were explained to him, he directed both the minister of finance and the Central Bank of Nigeria to prioritise the complete off-setting of the pension liabilities under the CPS [contributory pension scheme] so retirees don’t have to wait forever for their pension.”
Further, the ministry sought the president’s participation in the World Pension Summit, specifically with the World Pension’s Reward which will look into African countries’ innovation, corporate governance and their administering of African benefits.
When it comes to the compliance of pension pay-outs, Anohu-Amazu said, “That’s the beauty of the contributory pension system, you don’t have to run after anyone to pay your dues, you receive quarterly statements as soon as you retire, your money is paid immediately.”
She noted the difference in the old system of accrued rights because those contributions are “safe and intact” and they are just waiting for the accrued rights to come in so that the computation can be done on a global basis. “Those who have retired on the contributory system don’t have that problem.”