One of the advantages of the Contributory Pension Scheme (CPS) is that it allows a contributor access 25 per cent of his/her Retirement Savings Account (RSA) when he/she loses his job, the Director-General, National Pension Commission (PenCom), Mrs. Aisha Dahir-Umar, has said.
Last year, she said, N21.52 billion was paid to 38,846 Retirement Savings Account (RSA) holders who lost their jobs and were unable to secure employment after four months.
The PenCom DG in a statement said the commission also approved N6.55 billion to Pension Fund Administrators (PFAs) due to temporary job losses as payment to 9,602 RSA holders in the first quarter of the year while N6.65 billion was paid to 9,250 RSA holders in the second quarter .
She maintained that the Pension Reform Act (PRA) 2014 provides that where an employee has accessed the 25 per cent for temporary loss of job, such employee shall subsequently access the balances in the RSA only at retirement.
She said: “The PRA 2014, describes a ‘Temporary loss of job’ as when an employee who loses a job is unable to secure another employment after four months. Section 7(2) of the PRA 2014 states that ‘where an employee voluntarily retires, disengages or is disengaged from employment as provided for under section 16(2) and (5) of the PRA 2014, the employee can with the approval of the Commission, withdraw an amount of money not exceeding 25% of the total amount credited to his RSA. This is provided that such withdrawals shall only be made after four months of such cessation of employment or retirement and the employee does not secure another employment.
“The above provision in the PRA 2014 was significant during the outbreak of the COVID-19 pandemic which disrupted work places and displaced a great number of workers. The pandemic impacted the global economy and Nigeria was not exempted from its negative impact. Employers of labour were forced to reduce their operations, resulting in job losses. However, employees under the CPS had their RSA balances to supplement the hardship being experienced.
“Further to the above provision, it is important for workers and retirees under the CPS to understand that the scheme was created to cater for life at old age and therefore, the operations of the CPS does not allow RSAs to operate as the normal savings account in the conventional commercial banks where a customer deposits and withdraws funds at any given time. Consequently, all withdrawals from an employee’s RSA are based on conditions allowed under the PRA 2014, which includes the 25% access for temporary loss of job”.
She stressed that it is imperative to note that an employee who accesses 25 per cent of his or her RSA balance due to loss of job is mandated to resume pension contribution into the same RSA upon securing another employment.
Such an employee, according to her, is expected to forward his or her existing RSA Personal Identification Number (PIN) to the new employer so as to allow for easy remittance of their pension contribution.
“In order for an RSA holder to seamlessly access 25 per cent of his or her RSA, such person must submit a letter of acceptance of resignation or disengagement issued by the employer. Where the employer fails or refuses to accept the resignation letter from the employee, the PFA shall write the employer confirming the employee’s resignation and ensure that an acknowledgement copy is kept as proof of receipt.
“Also, where the employer fails to respond to the PFA’s inquiry above within 30 days, the employer’s refusal is taken as acceptance of the employee’s resignation for the purpose of benefits payment. To conclude the processes involved in accessing 25 per cent of the RSA, an RSA holder makes a formal request for withdrawal of 25 per cent of RSA balance.
“Once the letter of acceptance of resignation or disengagement and a formal request for 25 per cent withdrawal are submitted to the PFA, the PFA will do its due diligence and forward same to the Commission for approval. Upon approval from the Commission, such RSA holder is notified by the PFA,” she added.