PenCom Issues Revised Regulations for Retirement Benefits


The National Pensions Commission published revised regulations on retirement and end-of-career benefits on Monday for immediate implementation.

The regulation simplifies certain difficulties and guides the process of access to retirement and end-of-career benefits by contributors and retirees under the contributory pension scheme.

This is the first comprehensive review of the regulations since their initial publication in 2007.

The commission said the review had received input from “key stakeholders” to ensure more effective administration of pension benefits.

According to a press release from the commission on Monday, the revised regulations contain several new provisions on the enhancement of the pension, voluntary contributions, temporary access to the RSA due to job loss, the payment under the Micro Pension Plan, administrative sanctions in the event of infringement by Pension Fund Administrators (PFA). ), among others. The regulation also introduces significant changes to several existing provisions while clarifying others.

The main strengths of the revised regulations include simplification of the documentation process, non-confirmation of employment status by employers, access to lump sum, consolidation of RSA before benefits are paid.

Documentation process

While the old regulations outlined the documents required for pensioners to access benefits, the revised regulations, in an effort to simplify the process, have now mandated PFAs to endeavor to ensure that all documents preparations for retirement of the holder of the retirement savings account (RSA) must be provided and concluded within four months before the date of retirement.

“In order to ensure that future retirees are duly informed on how to access their benefits, the PFAs have also been mandated to advise future retirees to consult their websites and familiarize themselves with the CPS retirement package containing the scheduled withdrawal (PW) and retreated features. Life annuity (RLA) for at least three months until the date of retirement. The pack also contains other salient questions that would guide retirees towards a smooth retirement process”.

Non-confirmation of employment status by employers

In addition, the revised regulation has simplified the provisions relating to the declaration and documentation required to access the RSA due to the temporary loss of employment.

Temporary job loss has been defined as a situation “where an employee voluntarily retires, disengages or is disengaged before reaching the age of 50 and is unable to find another job after four months of disengagement. “.

“The provision deals with situations where employers refuse to confirm the retirement or disengagement of their former employees. Before this revision, a letter of acceptance of resignation or disengagement issued by the employer is mandatory for a retired contributor requesting the payment of 25% for temporary loss of employment. However, the revised regulations provide that if the employer does not accept/refuse

resignation letter from the employee, the PFA should write to the employer to confirm the employee’s resignation and ensure that a copy of the acknowledgment of receipt is kept as proof of receipt.

In the absence of a response from the employer to the PFA’s request within 30 days, the employer’s refusal constitutes acceptance of the employee’s resignation with a view to payment of the indemnities”.

Additional lump sum payment

Significantly, in terms of the lump sum payment, the revised regulations clarified that retirees will be allowed to access the additional lump sum after payment of the initial lump sum provided there are additional fund inflows into the RSA from the from employers.

However, the additional payments must first be applied to increase the pension up to 50% of the retiree’s final salary, with the balance being payable as a lump sum.

When the retiree’s pension has already reached 50% of the last salary, the retiree can choose to receive all the additional payments in the form of a lump sum. When the additional contribution to the RSA of a life annuity for retirees on retirement (RLA) does not reach 4,100,000, the amount will be paid directly into the bank account of the retiree, subject to the approval of the Commission.

RSA consolidation before payment of benefits

The revised Regulations also clarified that the RSA must be consolidated before you can access pension benefits. A retiree will only be able to access his pension rights when his RSA is consolidated. The elements of a retirement RSA should consist of accrued pension rights or pre-act benefits (if any) for employees who were in employment before the start of the CPS,

employer/employee pension contributions, investment returns and the fixed part of voluntary contributions (if applicable).

The new regulations direct the PFA to take the necessary steps to liaise with the employer and other relevant parties, to ensure that all rights of a pensioner or deceased person are credited to their RSA at purposes of determining the final balance of the RSA, before processing the benefits.

Accrued pension benefits for private sector contributors

In addition, the revised regulations provided for the administration of pre-law benefits, which are accrued pension benefits of contributors primarily in the private sector pursuant to the employer’s trust deed prior to the start of the CPS in June 2004 Any employee who retires and has contributions prior to the deed must notify the PFA of their intention to withdraw the balance prior to the deed. A PFA will ask the retiree to provide the necessary documents and a request for access to the Pre-Deed portion of the RSA balance. Therefore, the pre-deed balance can be paid to the retiree separately, before selecting scheduled withdrawal or annuity modes to access retirement benefits.

In Part II, we will continue our presentation on the highlights of the revised Regulations on retirement and end-of-career indemnities.

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