National Pension Commission (PenCom) has issued a Notice to the general public on the Discontinuation of Death Benefits Account (DBA) for Deceased Employees Under the Contributory Pension Scheme.
PenCom stated that Section 11(1) of the Pension Reform Act (PRA) 2014 mandates every eligible employee to maintain a Retirement Savings Account (RSA) with a Pension Fund Administrator (PFA) of his/her choice.
The Act also mandates every employer to open a “Nominal RSA” for its employee, within six months of assumption of duty for employees who fail to open an RSA in accordance with section 11(5) of the PRA 2014. Employers are therefore required to advise their employees to open a Retirement Savings Account (RSA) with any PFA that the employee chooses and inform the employer of his/her RSA number, where the employee refuses to open an RSA within 6 months of assumption of duty, the employer is required to open a Nominal RSA for that employee.
Prior to the PRA 2014, Death Benefits Accounts (DBA) have been used by legal beneficiaries to access the benefits of the deceased employees who did not open RSA during their lifetime. However, pursuant to the above cited statutory provisions, this practice is no longer valid.
Accordingly, the general public is hereby notified that the processing of DBA for death benefits claims would be discontinued with effect from 1 February 2020. All PFAs have been directed to stop the opening of DBAs with effect from 31 January 2020.
The National Pension Commission (PenCom) reiterates the need for all employees to ensure that they open RSAs with any PFA of their choice.