The new pension era makes provision for cross-border pension contributions for individuals in the diaspora. A Nigerian working abroad who wishes to be part of the CPS can make contributions from overseas into an RSA account of his.
The new pension era also makes it possible for foreign nationals working in Nigeria to participate in the CPS if they so wish.
✓ Foreign Nationals
For foreign nationals working in Nigeria, participation in the Nigerian CPS is entirely Voluntary! It is by their choice if they want to participate. Therefore, any foreign national who wishes to participate in the Nigerian CPS can do so via the Voluntary Contribution arrangement. He or she can approach any PFA of his or her choice to open an RSA into which his or her Voluntary Contributions would be made.
✓ Nigerians in Diaspora
For Nigerian working abroad, they can be categorized into 3:
1) Nigerians working for a multinational in Nigeria and transferred or on secondment to a foreign country.
2) Nigerians living and working abroad with a foreign or Nigerian entity.
3) Nigerians returning from foreign employment.
1) Nigerians working with multinationals in Nigeria but are now moving abroad due to transfer or secondment, chances are that they already have an RSA opened with a PFA. In their instance, they are required to notify their PFAs of their new arrangement and instruct the PFA to freeze their existing RSA until they return from abroad to continue their normal pension contributions.
If they wish to make contributions while still abroad, they are allowed to indicate their willingness to do so with their PFA. This means that, while they are abroad, they can participate in the CPS by making only Voluntary Contributions. This is because it is most likely that in the country they are working abroad, they will be enrolled in a pension scheme over there.
Therefore, it would be a burden on them to make contributions to the CPS compulsory. And more so by regulation, the Act specifically mandates only Nigerian entities to compulsory participation in the scheme.
2) The same applies to Nigerians who are living and working abroad but also wish to participate in the CPS. They are allowed to make a Voluntary Contribution after opening an RSA with any PFA of their choice. But, if the entity abroad is a Nigerian entity, say for instance Dangote Cement in Ivory Coast or Globacom in Ghana, such a Nigerian can repatriate his pension contributions with the oversea pension administrator into his RSA in Nigeria if this is allowed by the oversea pension arrangement. Otherwise, it will only be the Voluntary Contribution that will be made into his RSA.
3) For Nigerians returning from foreign employment, they are allowed to open an RSA into which their Contributions would be made if they don’t have one already before going or while abroad.
If the Nigerian returnee secures employment, the RSA account will be used to receive Contribution made therefrom otherwise they can make a Voluntary Contribution into the RSA. They can also repatriate their pension entitlements in their foreign pension arrangement with an oversee pension scheme if the foreign pension arrangement allows this.
Please note that all contributions made into the RSA must be denominated in NAIRA. Therefore, all remittances from abroad in foreign currencies would firstly be translated to Naira equivalents before they are paid into the RSA of the contributor.
To this end, the PFA/PFCs have domiciliary accounts opened for foreign currency remittances which are converted at the prevailing exchange rate before payment into the contributors’ RSA. Also, any foreign remittance of less than Five Thousand Naira is not allowed.
One thing is common in the cross-border pension contribution and it is VOLUNTARY CONTRIBUTION.
In all instances, the voluntary contribution is the overriding common factor. So, it therefore, means that the way a foreign national or Nigerians working abroad can participate in the CPS is through the Voluntary Contribution window. You can read more on Voluntary Contribution here from our previous article to learn more.