PenCom to monitor workers’ Additional Benefits Scheme
By Patience Ikpeme
The National Pension Commission has implemented measures to ensure effective management of additional benefits offered to employees by their employers. This initiative was revealed within a framework for the establishment of Additional Benefits Schemes (ABS) under the Contributory Pension Scheme.
The framework, in accordance with Section 4 (4) (a) of the Pension Reform Act (PRA) 2014, enables employers to provide additional benefits to retiring employees. However, it’s important to note that only institutions licensed by the National Pension Commission, as per Sections 54 and 56 of the PRA 2014, are permitted to hold and manage pension funds and assets. Section 59 of the same Act outlines the minimum penalties for violations of these provisions.
Under this framework, employers have the option to establish ABS to facilitate the payment of extra benefits to employees upon their departure from the organization. These ABS, as part of the Contributory Pension Scheme (CPS), will be overseen by licensed Pension Fund Administrators, and the assets will be safeguarded by licensed Pension Fund Custodians. All these actions will be conducted in accordance with the provisions of the PRA 2014 and subject to the approval of the commission.
PenCom stated, “This framework is intended to delineate the procedures for employers to establish and manage ABS, which complements the retirement benefits provided under the CPS.”
To establish an ABS for their employees, employers must demonstrate compliance with the PRA 2014 by maintaining current pension contribution remittances, providing Group Life Insurance coverage, and executing a portfolio management agreement with Pension Fund Administrators of their choice.
Employers also have the option to appoint one or more Pension Fund Administrators to manage their ABS. In the case of multiple PFAs, a lead PFA must be appointed, and the commission must be informed accordingly.
