Revised Regulation on the Administration of Retirement and Terminal Benefits
The National Pension Commission (PenCom or “the Commission”) recently issued a Revised Regulation on the Administration of Retirement and Terminal Benefits (“the Revised Regulation”). The Revised Regulation replaced the erstwhile Regulations for the Administration of Retirement and Terminal Benefits under the repealed Pension Reform Act (PRA), 2004, and sets out the procedures for application of the relevant sections of the PRA, 2014 to be adopted by Pension Fund operators for the administration of retirement and terminal benefits under the Contributory Pension Scheme (CPS).
We have highlighted below some of the significant provisions in the Revised Regulation:
1. Scope and Objectives
The Revised Regulation covers Retirement Savings Account (RSA) holders and/ or beneficiaries who are employees in the private and public sectors, the Federal Capital Territory, and States and Local Governments that have adopted the CPS. It provides the framework for the administration of benefits, including documentation, consolidation of funds in the RSA and payment under the different modes of benefits payment. The Revised Regulation also defines terms not interpreted under Section 120 of the PRA such as benefits withdrawal, death benefits, enbloc payment, mandatory retirement, etc., and expanded the definitions of some terms already included in the PRA, including annual total emolument, employer, pension fund custodian and retirement savings account.
Although the definitions are meant to provide clarifications on the relevant terms, it must be noted that the Revised Regulation cannot amend, replace, or vary the PRA which is an Act of the National Assembly. Therefore, the interpretation of terms in the PRA supersedes identical terms defined in the Revised Regulation.
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