PenCom Revises Regulation on Retirement and Terminal Benefits, Key Highlights (Part 3) – PensionNigeria

PenCom Revises Regulation on Retirement and Terminal Benefits, Key Highlights (Part 3)

The National Pension Commission (PenCom) has released the Part 3 of the key highlights in the recently revised Regulation on Retirement and Terminal Benefits.

PenCom had previously released Part 1 and 2, Part 3 represents the last part for the key highlights in the revised regulation. You can check out Part 1 and 2 in the links after the post, if you are yet to read it.

PenCom Revises Regulation on Retirement and Terminal Benefits, Key Highlights (Part 3)

To guard against delays in the payment of retirement and terminal benefits, the National Pension Commission (PenCom) has introduced administrative sanctions in the recently issued Revised Regulation on the Administration of Retirement and Terminal Benefits.

The administrative sanctions aim to ensure that PFAs promptly process the payment of retirement benefits to retirees. The Revised Regulation contains sanctions against PFAs that delay the submission of a request for the payment of benefits by a retiree and other infractions such as negligence in processing retirement benefits. The key administrative sanctions introduced in the Revised Regulation are presented below:

Delays in Submission of Requests for the Payment of Benefits

The Revised Regulation provided that where a PFA delays the submission of a request for the payment of benefits to the Commission for approval for more than 10 working days from the date of submission of relevant documents, the PFA shall pay an administrative sanction of N200,000 and N20,000 for every day the delay subsists. An employee may access his/her RSA as a result of mandatory retirement, compulsory retirement, retirement on medical grounds and temporary loss of employment/disengagement. It is mandated that PFAs should speedily process and forward applications from pension contributor/retiree who apply to access their benefits.

Delay in Payment of Retirement Benefits

Once the approval of PenCom has been secured, PFAs are mandated to pay the retiree or beneficiary his or her benefits. Where a PFA delays payment of retirement benefits for up to five working days after receipt of no-objection from the Commission, the Revised Regulation provides that the PFA shall pay an administrative sanction of N200,000 and N20,000 for every day the delay subsists. It is significant to note that every PFA must obtain a no-objection from PenCom before benefits are paid. A PFA and/or PFC that pays retirement benefits without the Commission’s prior no-objection, will pay an administrative sanction of N1 million. This is in addition to refunding either the principal amount so paid or lost investment income thereof, whichever is higher.

Discrepancies in Payment of Benefits

The Revised Regulation provides that a PFA that pays an amount in excess of that specified on the no-objection granted by the Commission shall be liable to refund the amount overpaid and investment income lost arising from the transaction, except where the difference is a residual amount or as a result of return on investment. Similarly, any PFA that pays an amount lower than that specified on the no-objection approval granted by the Commission, shall, in addition to paying the differential to the retiree, pay an administrative sanction of N500,000.

Failure to Enlighten a Retiree on the Modes of Accessing Retirement Benefits

There are two modes of accessing periodic retirement benefits: Programmed Withdrawal (PW) and Retiree Life Annuity (RLA). The Revised Regulation has mandated PFAs to properly enlighten prospective retirees on the features of the two modes of receiving their retirement benefits. PFAs are now required to make available to prospective retirees’ hard copies of the CPS Retirement Pack, you can check out the soft copy HERE . The pack contains salient issues that would guide the retirees towards a smooth retirement process. In addition, PFAs have also been mandated to advise prospective retirees to check their websites and be acquainted with the CPS Retirement Pack. The Revised Regulation now provides that a PFA that fails, neglects or refuses to enlighten the retiree on the features of PW and RLA to enable the retiree make an informed decision shall be liable to an administrative sanction of N500,000.

Benefits Computation

There are now administrative sanctions for negligence bordering on wrong computation of retirement benefits by PFAs. The new regulation provides that any PFA that negligently submits to the Commission a request with incorrect information that is likely to result in accelerated depletion of the RSA balance of a retiree, shall pay an administrative sanction of N500,000. In addition, the PFA shall refund to the RSA both the amount that was overpaid and the lost investment income. A provision has also been made that any PFA that negligently submits to PenCom, a request with incorrect information and later request the permission of the Commission to resubmit the request, shall pay an administrative sanction of N100,000 per RSA.

It is imperative to state that the administrative sanctions were introduced to ensure PFAs comply with the provisions of the Revised Regulation. In addition, the Revised Regulation also provided that any violation for which no sanction has been prescribed shall attract an administrative sanction of not more than N2 million. All sanctions in the regulation shall be borne by the PFA or PFC and paid from its own company funds.

This piece concludes PenCom’s presentations on the highlights of the Revised Regulation on the Administration of Retirement and Terminal Benefits. Part I highlighted salient amendments to several existing provisions while providing more clarity on others. Part II focused on several new provisions on Pension Enhancement, Voluntary Contributions, payment under the Micro Pension Plan, amongst others while Part III dwelt on Administrative Sanctions for violations by PFAs.

You can check out Part 1, 2 and 3 in the links below.

EDUCATE YOUR SELF ON THE LAW USED FOR WITHDRAWING FROM Retirement Savings Account (RSA) = DONT MISS
PenCom Revises Regulation on Retirement and Terminal Benefits, Key Highlights (Part 1)
PenCom Revises Regulation on Retirement and Terminal Benefits, Key Highlights (Part 2)
PenCom Revises Regulation on Retirement and Terminal Benefits, Key Highlights (Part 3)

Check out other Publications by National Pension Commission (PenCom) HERE

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