Pension is a fund into which a sum of money is added during an employee’s employment years.
A Pension Fund Administrator is an entity licensed by the National Pension Commission (Commission) and charged with the responsibility of managing and investing the pension funds. Each employee is free to choose a PFA.
A Pension Fund Custodian (PFC) is a company licensed by the National Pension Commission to keep pension money and assets for the employee on behalf of the PFA.
An employee contributes a percentage of his salary and the employer contributes a percentage of the employee’s salary towards the retirement benefits of the employee.
- The CPS was extended in 2014 to cover employees in the public, state and private sector with at least three (3) employees and workers under the Federal Capital Territory. It is expected that those in the informal sector will soon be brought under the scheme.
- Retirement Saving Account (RSA) is a dedicated account opened with a Pension Fund Administrator solely for pension funds.
Additional Voluntary Contributions (AVCs) are contributions you make to your employer pension scheme to build up an additional retirement fund.
The PFA manages the pension funds and decides which kind of investments to make while the PFC holds the pension funds assets and acts to the order of the PFA.
The total contribution will be paid out by the employer directly to a Pension Assets Custodian (PAC) and will be managed and invested by the Pension Fund Administrator (PFA) of the employee’s choice.
No. The employer remits its contribution as well as the employee’s contribution directly to the Custodian.
The PFA charges fees for the services being rendered on the RSA subject to such guidelines as may be issued by the National Pension Commission from time to time. Currently, a maximum monthly fee of N100 and N5 for VAT for every monthly contribution is allowed under the regulation.
The accounts are portable and will remain with you for life. You simply notify your new employer of the PFA that manages your account and thereafter your contributions will be transferred to the relevant Pension.
- It means that the amount contributed by the employer and employee is actually paid to a Custodian and invested by the Pension Fund Administrator. This gives the employee immediate ownership of his/her pension benefits.
- The Pension Assets Custodian is an entity licensed by the National Pension Commission to hold pension assets in safe custody.