The Pension Reform Act 2004 introduced the Contributory Pension Scheme (CPS)

to:

·provide sustainable, predictable and adequate source of retirement benefits

·applies to employees in the Public Service of the Federation, the FCT and the Private Sector organizations with 5 or more employees

·Establish the National Pension Commission (PenCom) as the sole regulator and supervisor of pensions matters in Nigeria

Objectives of the Pension Reform

· Ensure that every worker receives his benefits as and when due

·Empower the worker

·Assist workers to save in order to cater for their livelihood during old age

·Stem the growth of outstanding pension liability

·Establish uniform rules, regulations and standards for administration of pension matters

Establish strong regulatory & supervisory framework

Coverage of the Contributory

·The Contributory Pension Scheme (CPS) coverage by virtue of S. 1 of the PRA:

·Public Service of the Federation

·Public Service of the FCT

·Private Sector Organization with 5 or more employees

·States and LGs that have enacted Laws and adopted the CPS

·Exemption from the Contributory Pension Scheme by virtue of S. 8 of the PRA:

·Pensioners existing before PRA 2004

·Persons who had 3 or less years to retire as at June 2004

·Judicial Officers by virtue of S. 291 of the 1999 Constitution

·Personnel of the Military, Intelligence and Security Services (PRA Amendment Act 2011)

Features of the Contributory Pension Scheme

·Contributory and fully funded

·Shared Responsibility between the employer & employee

·Minimum of 15% of monthly emolument

·Incremental accumulation of pension funds and assets

·Based on Individual Retirement Savings Account (RSA)

Portable Accounts

·Employee maintains his RSA for life regardless of transfer of service or change of employment

·Assets privately managed by PFAs and kept by PFCs

·Life Insurance Policy maintained by Employer up to three time Annual Total Emolument