Nigeria’s National Pension Commission (PenCom) has released a draft framework for micro pension plan for stakeholders’ consideration and comments, according to Deloitte Nigeria in a report.
According to the report, the framework seeks to extend pension coverage to employees of organisations with less than three employees and self-employed persons (Micro Pension Contributors) in accordance with the provisions of Section 2(3) of the Pension Reform Act 2014 (PRA).
“Upon implementation, the framework will ensure provision of retirement benefits to the Micro Pension Contributors (MPCs) through clearly spelt out guidelines on operational modalities for the Micro Pension Plan (the Plan),” the report stated.
In addition to the operational modalities, the framework also proposes strategies for securing participation in the Plan and minimum requirements for participation by licensed pension fund administrators and custodians.
Key highlights of the framework include:
-Participation shall be by registration and completion of the Retirement Savings Account (RSA) Opening form.
-The minimum registration age is 18 years but persons from 15 years may participate subject to approval by the guardian.
In recognition of the peculiarities of the sector, the report notes that MPCs are entitled to some incentives, which include access to a portion of their RSA balance – 25 percent of contributions made shall be available for contingent withdrawal before “retirement age”.
The remaining 75% shall be managed exclusively for retirement benefits upon retirement – under extant rules. The withdrawal options are programmed withdrawal and life annuity.
Other incentives include possibility of minimum pension guarantee, subject to compliance with certain provisions as prescribed by PenCom; and access to other approved incentives.
Remittance of contributions may be made daily, weekly, monthly or as may be convenient to the MPC. Such contributions can be made in naira via cash deposit, electronically or any CBN approved payment platform.
Subject to PENCOM’s approval, RSA holders (under the general regime), who are no longer in employment and yet to draw pension, may convert and participate in the plan. In the same vein, MPCs could move to the general contributory scheme.
Licenced Pension Fund Administrators and Custodians are the only participants allowed and they are obliged to render periodic returns on the operations of the plan.
Before the Framework is finalised, Deloitte advises stakeholders to send inputs and review comments to firstname.lastname@example.org, to enable PenCom to proceed with the next phase of the implementation.
It is expected that once the Framework is finalised and rolled out for full implementation, there would be increased voluntary participation in the Contributory Pension Scheme by the informal sector.”