Retirees in Nigeria are given two retirement benefit modes, which are Programmed Withdrawal (PW) and Retiree Life Annuity (RLA) in line with the provisions of Section 7(1) of the country’s Pension Reform Act (PRA) 2014. Someone who is retiring is required to choose between the two modes by which his/her retirement benefits shall be paid.

Programmed Withdrawal

Programmed Withdrawal is a stream of income paid by a Pension Fund Administrator to a retiree on monthly or quarterly basis determined using a Programmed Withdrawal Template over an expected life time.

Features of Programmed Withdrawal

1. Programmed Withdrawal is a product offered and administered by Pension Fund Administrators (PFAs)

2. Regulated by the National Pension Commission (PenCom)

3. Pays monthly/quarterly pension over an expected life span as determined using the A(55) Tables of Annuitants Ultimate rates published by the Institute and Faculty of Actuaries of United Kingdom (as amended).

4. The balance in the RSA is re-invested by the PFA to generate income/funds for the retiree. The profit/loss on investment is credited into the retirees RSA.

5. Retiree may benefit from periodic pension enhancement resulting from returns on investment of the pension funds in their RSAs.

6. Balance of retirement benefits remain in the retiree’s RSA and RSA statement of account is issued to retirees quarterly or on request.

7. Retirees may move to Retiree Life Annuity after one year of being under Programmed Withdrawal.

Annuity

Retiree Life Annuity is a stream of income purchased from a life insurance company with the available RSA (Retirement Savings Account) balance under the CPS (Contributory Pension Schene) as premium. It provides a guaranteed periodic income (pension) to a retiree throughout his/her life after retirement.

Features of Annuity

1. Annuity is a product offered and administered by Life Insurance Companies (Retiree Life Annuity Providers)

2. Regulated by the National Insurance Commission (NAICOM)

3. Pays monthly/quarterly Annuity for life as determined using usually the PA (90) Tables of Annuitants Ultimate rates published by the Institute and Faculty of Actuaries of United Kingdom (as amended).

4. The premium is transferred to a Retiree Life Annuity Pool and invested to generate income to the pool.

5. Periodic pension enhancement may be applicable depending on type of RLA purchased.

6. Retiree receives monthly/quarterly annuity as long as he/she is alive.

7. A retiree on RLA cannot move to programmed withdrawal but may change to another RLA provider after at least two years with existing RLA provider.