FAQ

WHAT IS CONTRIBUTORY PENSION SCHEME (CPS) ?

CPS is a contributory, fully funded, privately managed pension scheme that is based on individual accounts. It ensures that everyone who has contributed receives his benefits upon retirement as and when due.

WHAT DOES "FULLY FUNDED" MEAN ?

It means that the pension plan has sufficient assets to fund all pension liabilities.

HOW DOES IT WORK ?

The PRA 2014 states that an employee should contribute a minimum of 8% of his monthly emoluments while the employer should contribute a minimum of 10% of same towards the retirement benefits of the employee.

HOW MUCH WILL I NEED TO CONTRIBUTE ?

A minimum of 8% of total of your monthly basic salary, housing and transport allowances.

HOW MUCH WILL MY EMPLOYER CONTRIBUTE ?

A minimum of 10% of the employee's total monthly basic salary, housing and transport allowances.

WILL THIS LEAD TO A DECREASE IN MY SALARY ?

No. You only succeeded in saving part of your salary towards your retirement benefits.

WHAT WILL HAPPEN TO THE CONTRIBUTION ?

The total contribution will be paid out by the employer directly to a Pension Fund Custodian and will be managed by the Pension Fund Administrator of the employee’s choice.

WHAT ARE THE MODES OF MAKING PAYMENTS?

Cash Cheque, POS, E-payment, Transfers etc.

WHAT ARE VOLUNTARY CONTRIBUTIONS?

These are additional contributions eligible employees can remit to their Retirement Savings Accounts (RSAs) through their employers as allowed by the PRA 2014.

CAN I GO TO THE BANK AND PAY VOLUNTARY CONTRIBUTIONS INTO MY RSA ACCOUNT MYSELF?

No. It has to be paid through your employer.

WHICH EMAIL CAN I SEND MY SCHEDULE TO?

zpcenquiries@zenithcustodian.com

WHO IS THE CONTACT PERSON TO FOLLOW UP WITH ON OUR REMITTANCE ?

You can call 01-2782906-20 or send an email to zpcenquiries@zenithcustodian.com

WHO IS A PENSION FUND ADMINISTRATOR (PFA)?

A PFA is an entity licensed by the National Pension Commission (PenCom) and charged with the responsibility of managing the pension funds. Each contributor is at liberty to choose a PFA of his/her choice.

WHO IS A PENSION FUND CUSTODIAN (PFC)?

A PFC is an entity licensed by the National Pension Commission (PenCom) to collect pension contributions, settle investment trades, hold pension assets in safe custody and pay pension benefits on the advice of the PFAs and the PenCom.

WHAT IS A CLOSED PFA?

This is a pension scheme being managed by the employers with the total pension assets with N500m and above that have obtained approval from the National Pension Commission to this effect. This enables them operate/manage its funds independently.

WHAT IF MY SCHEME HAS LESS THAN N500,000,000 PENSION FUND ASSETS ? CAN I STILL KEEP IT?

Yes, you can still maintain the scheme but it will have to be managed by a PFA.

WHAT IS THE DIFFERENCE BETWEEN A PFA AND A PFC ?

The PFA manages the pension funds through various investments in accordance with the investment guidelines by the PenCom while the PFC is the custodian of the pension funds assets and acts to the order of the PFA in line with regulations.

ARE PENSION CONTRIBUTIONS REMITTED TO THE PFA ?

No. The employer sends his contribution as well as the employee’s contribution directly to the PFC.

WHAT IS A RETIREMENT SAVINGS ACCOUNT (RSA) ?

This is similar to a bank account. Every contributor will open a Retirement Savings Account (RSA) with a PFA of his choice and remitted contributors' contributions through the employers are subsequently credited to individual RSA accounts on a regular basis. The PFA will be required to issue a statement of account at least once every quarter.

CAN I SWITCH PFA(s) ?

Yes, this can be achieved upon commencement of the transfer window.

WHAT HAPPENS IF A PFA FAILS?

Your savings will not be affected as custody of your funds resides with the PFC. In addition, Pension Funds are invested in a diversified portfolio of investments including Government Securities, Stocks and Real Estate in line with the PenCom's Investment Guideline.

WHAT HAPPENS TO MY RSA ACCOUNT WHEN I CHANGE JOBS ?

Nothing happens. The account number remains with you for life. You simply notify your new employer of your PFA and thereafter your contributions will continue to be remitted to your RSA account through its PFC.

WILL THIS INVOLVE EVERYONE THAT WORKS ?

It covers employees in the private sector who are in employment in an organisation in which there are three or more employees and the public sector.

HOW DOES THIS DIFFER FROM THE OLD SCHEME ?

The old scheme is a Defined Pension Benefit which places the whole responsibility for the payment of the staff retirement benefit solely on the employer while the Contributory Pension Scheme is jointly funded by the employee and the employer.

HOW WILL I BENEFIT ?

Lumpsum payment will be paid to the contributors after retirement and subsequently monthly pension payments are guaranteed.

HOW CAN I BE SURE THAT MY CONTRIBUTIONS ARE SAFE ?

The function of fund administration and custody of pension funds are segregated. Also, all custodians are subsidiaries of major banks that guarantee the safety of the funds. In addition, investment of pension funds are regulated by the PenCom who is empowered to sanction and if need be prosecute defaulting operators.

HOW CAN I KEEP TRACK OF MY CONTRIBUTIONS/RSA BALANCE?

PFAs issue regular statements to contributors.

WILL INFLATION AND DEVALUATION NOT ERODE THE VALUE OF THE CONTRIBUTIONS?

PFAs are saddled with the primary responsibility of effective administration of pension contributions in line with regulations to guarantee the safety of funds and reasonable returns. Furthermore, the National Pension Commission ensures prudent management of pension assets through constant supervision.

WHAT IS THE RETIREMENT AGE IN THE ACT?

The Act stipulates a minimum retirement age of 50 years.

WHEN WILL I HAVE ACCESS TO THIS MONEY?

Upon either retirement and you are 50 years and above.

CAN I WITHDRAW ANY PORTION OF IT ?

Yes, upon the loss of job for a consecutive period of 4 months.

WHAT IS PROGRAMMED WITHDRAWAL?

A programmed withdrawal is a method by which the employee collects his accumulated retirement benefits in periodic sums for the length of an estimated life span.

WHAT IS ANNUITY?

An annuity is a product purchased from an approved life insurance company which provides monthly or quarterly income to the retiree during his/her lifetime.

WHAT IS THE ROLE OF THE NATIONAL PENSION COMMISSION - PENCOM?

PenCom is charged with the regulation and supervision of the pension schemes as well as the powers to formulate, direct and oversee the overall policy on pension matters in Nigeria.

WHAT IS THE ROLE OF THE GOVERNMENT ?

The current pension system (Contributory Pension Scheme) operates independently without government interference.However, the government only provides supervision through its regulatory body - The National Pension Commission. The government has set up a specialized regulator of pension schemes and appointed the members of the board of the Regulator. Government will not tamper with the savings as it will not have access to them. In fact, the Government shall be primarily concerned with ensuring the safety of the savings through the establishment of the National Pension Commission.

HOW WILL THE ECONOMY BENEFIT?

There will be a huge pool of long-term funds available for investments which will form a foundation for economic development.

WHAT HAPPENS TO RETIREMENT BENEFITS OF AN EMPLOYEE WHO IS ALREADY UNDER A PENSION SCHEME BEFORE THE COMMENCEMENT OF THE PENSION REFORM ACT 2004 AND 2014 AS AMENDED?

The employee’s right to accrued pension for past service is guaranteed by the Act. In the case of the Public Service of the Federation and Federal Capital Territory the right shall be acknowledged through a Federal Government Retirement Bond which shall be redeemed by the Federal Government through the Central Bank of Nigeria upon retirement of the employee. However, in the case of funded schemes and the private sector, employers shall transfer to the Retirements Savings Accounts of its employees, any funds due to the employee. The shortfall shall become a debt and treated with same priority as salaries owed. The employer shall also issue a written acknowledgement of the debt and take steps to meet the shortfall.

WHAT WILL HAPPEN TO EXISTING PRIVATE PENSIONERS ?

Pension Boards in the Private Sector already in existence will be allowed to continue to administer their pensions provided if:

There is evidence that the pension scheme is fully funded at all times and any shortfall is made up within 90 days.

The Pension funds assets are segregated from the assets of the employer/company and held by a licensed PFC.

The employer must have also effectively managed pension fund assets for at least 5 years before the commencement of the Act and have met conditions set by the PenCom.

IS THE SCHEME OPTIONAL?

It is only those exempted by law that have that option which include:

(a) Members of the Armed Forces, the Intelligence and the Secret Service of the Federation.

(b) Any employee who is entitled to retirement benefits under any pension scheme existing before the 25th day of June 2004, being the commencement of the Pension Reform Act, 2004 but as at that date had 3 or less years to retire.

WILL GRATUITY BE PAID UNDER THE NEW SCHEME?

The Contributory Pension Scheme guarantees lumpsum and programmed withdrawal. However, an organization, at its own discretion can still elect to pay additional benefit to their staff.

WHAT IS THE MINIMUM VALUE OF PENSION GUARANTEED BY THE NEW SCHEME ?

The value of the minimum pension guarantee is to be determined from time to time by the National Pension Commission.

TRANSPARENCY, ACCOUNTABILITY AND GOOD GOVERNANCE ARE PREREQUISITES FOR A THRIVING AND EFFECTIVE ADMINISTRATION OF PENSION FUNDS. DOES THE ACT REFLECT THE APPLICATION OF THESE PRINCIPLES?

Yes. The Contributory Pension Scheme is managed by separate entities independent of your employer and it is highly regulated. There exists checks and balances among the operators.

HOW DO I LODGE A COMPLAINT IF I AM DISSATISFIED WITH YOUR SERVICE?

customercare@zenithcustodian.com