PROCEDURE FOR PROCESSING RETIREMENT BENEFITS

The procedures are for Programmed Withdrawal/Retiree Life Annuity. While Programmed Withdrawal is product offered by a PFA (Pension Fund Administrator) for the payment of
monthly/quarterly pension to retirees, Retiree Life Annuity (RLA) is is a special type of annuity for sale to retirees under the
CPS by Life Insurance companies approved by the National Insurance Commission (NAICOM).

Programmed Withdrawal /Retiree Life Annuity

(a) A PFA shall at the point of processing a retirement benefit, ensure that all
components of the RSA are consolidated.

(b) The amount in the retiree’s RSA shall be moved to Retiree Fund.

(c) The PFA shall compute the monthly or quarterly pension/annuity and
lumpsum from the retiree’s RSA balance using the Standard Retirement
Benefits Computation (SRBC) Template issued by the Commission, which
will guide the RSA holder on the choice of his/her preferred mode of
payment.

(d) Where the RSA balance is sufficient for PW/Annuity option, the monthly or
quarterly pension/annuity shall be at least 50% of the final salary based on
the ATE as at the date of his retirement.

(e) Where a retiree desires to withdraw a lumpsum, the PFA shall first determine
the amount required to provide pension or annuity for life. The residual
amount in the RSA may be paid as lumpsum in accordance with the retiree’s
desire.

(f) Without prejudice to 4.1(d) above, where the RSA balance cannot provide
50% of the retiree’s ATE as monthly/quarterly pension, such retiree shall be
entitled to a concessionary Regulatory Lumpsum of 25% of the RSA
balance.

(g) Notwithstanding 4.1(d)(e) and (f) above, where the RSA balance cannot
provide a monthly/quarterly pension or annuity of at least one third of the
prevailing minimum wage, the retiree shall be allowed to take the entire
balance in the RSA en-bloc.

(h) PFAs shall use the SRBC Template to compute the benefits of retirees and
arrears of monthly/quarterly pension (if any).

(i) Further to (h) above, PFAs shall use the RSA Balance as at date of
consolidation for determining the retirement benefits of a retiree.

(j) A retiree shall be eligible for pension arrears, only for the period between
the date of retirement and date of consolidation of his/her RSA. In the case
of retirees from self-funding agencies and private sector, pension arrears
shall be for no more than 6 months.

(k) Where a retiree on PW secures employment, he/she may request the
suspension of his/her monthly pension in writing and by filling a consent
form.

(l) Further to (k) above, when the retiree decides to resume collecting his/her
monthly pension, he/she shall request in writing. The pension would be
determined by reprogramming the current RSA balance using the retiree’s
current age. In such circumstances there shall be no pension arrears.
(m) PFAs shall use the SRBC Template to calculate the lumpsum for retirees
who choose RLA.

(n) For the purpose of computation and payment of pension/annuity, the
applicable date of retirement for a person that disengaged before the age of
50 years and had accessed 25% of his/her RSA balance shall be on his/her
50th birthday, if he/she is not re-employed before the 50 years of age.

(o) In line with 4.1(j) above, a retiree is not entitled to pension arrears for the
period before his/her 50th birthday anniversary.

(p) The retirement and terminal benefits of employees of any State or Local
Government under the CPS shall be computed in accordance with the
respective States/Local Government Pension Laws where such differs from
those of the Federal Government and private sector.

Periodicity of Pension Payments on PW

(a) A PFA shall inform the retiree to choose the desired periodicity of pension
payment, i.e. monthly or quarterly, which shall be reflected in the Consent
Form to be signed by the retiree.

(b) A PFA shall, under no circumstance, alter the periodicity of pension to a
retiree without the prior consent of the retiree and with the approval of
the Commission.

(c) A retiree is at liberty to change the periodicity of payment not more than
once in twelve (12) months.

(d) A PFA shall, within 2 working days of receipt of request for change of
periodicity of payment, re-programme the retiree’s benefits (without
lumpsum) using the current RSA balance, current age, gender and final
salary and forward same to the Commission for approval.

Pension Enhancement

There shall be a periodic pension enhancement for retirees on PW based on the
Return of Investment of funds in the RSA and the Commission’s directive:

(a) Retirees with a minimum of 5% growth in their RSAs, from the date of
initial programming or their last enhancement date, shall be entitled to
receive enhanced pensions.

(b) PFA shall review the retiree’s data/information and determine the RSA
balances as at the cut-off date. The information shall include the
following:

(i) Name of Retiree
(ii) PIN
(iii) Employer Code
(iv) Sector
(v) Date of Birth
(vi) Gender
(vii) Date of Retirement
(viii) RSA Balance at the date of initial programming/last enhancement
(ix) Approved Monthly Pension at the date of initial programming/last
enhancement
(x) RSA Balance as at the cut-off date
(xi) Frequency of pension payment (Monthly/Quarterly)
(xii) Growth in RSA balance (N)
(xiii) Percentage growth in RSA balance (%)

(c) A PFA shall use the Pension Enhancement Template provided by the Commission to re-compute the new monthly/quarterly pension using the
current age of the retiree, RSA balances as at cut-off date and any other
criteria that may be specified by the Commission from time to time.

(d) A PFA shall apply the growth in RSA balance only for pension
enhancement and not for additional lumpsum.

(e) A PFA shall ensure that eligible retirees sign a Programmed Withdrawal
consent form for the enhancement (See Appendix 4).

(f) A PFA shall forward computed enhanced pension in a format to be
specified by the Commission for “no-objection” (See Appendix 9).

(g) A PFA shall adjust the pension of the affected retiree to reflect the
enhanced pension.

Temporary Access to RSA Due to Loss of Job

(a) Any employee who voluntarily retires, disengages or is disengaged from
employment before the age of 50 years and wishes to withdraw an
amount not exceeding 25% of his RSA balance shall only do so after 4
months, if he/she is unable to secure another employment.

(b) The disengaged employee shall notify the PFA of his/her intention to
withdraw from the available RSA balance.

(c) A PFA shall request the disengaged employee to provide necessary
documents mentioned in 3.0 above and an application to access part of
the available RSA balance.

(d) A PFA shall forward all requests to access 25% of RSA balance to the
Commission for no-objection.

(e) Under no circumstance shall an employee who voluntarily retires,
disengages or is disengaged from employment after the age of 50 access
25% of his/her RSA in line with the above.

References:

• National Pension Commission: Revised Regulation on the Administration of Retirement and Terminal Benefits
• Revised Regulation on Retiree Life Annuity; Pursuant to the Pension Reform Act 2014, Jointly Issued By National Insurance Commission
  & National Pension Commission, September 2020