In Nigeria, every worker is expected to have a Retirement Savings Account (RSA). This is the position of the PRA 2014 (as amended).
Before the introduction of the CPS in 2004, there’s really no statutory regulations for compulsory pension contributions in the private sector. Only workers in the public sector and some big private companies enjoy pension benefits after retirement. In the private sector, the highest you would get in most cases is a one-off gratuity payment to retiring staff.
The introduction of the CPS thus makes it now compulsory for workers to enroll in the scheme. This applies now to both public and private sectors. Unlike the public sector where it is almost certain a worker will enjoy pension benefits on retirement only after working for a certain number of years, usually 5 years, the private sector needs a regulation in order to make it enforceable.
If you have been working and you don’t have a RSA in the private sector, here’s what you can do to have one
The PRA makes it compulsory for certain employees to to open an RSA immediately on being employed. It becomes a duty of the employer to open one for the worker if after 6 months an RSA is not opened by the employee.
The PRA encourages employer or entity with less than 15 workers to participate in the CPS by making monthly contributions for their workers. However, it does not stop employees irrespective of the number of workforce (below or above 15) from joining the CPS. For those working as self employed or having less than 3 workers, they are also encouraged to join the CPS via the Micro pension scheme.
All these avenues are ways to ensure that everyone is captured under the Contributory pension scheme.
How do you open an RSA
The PRA allows employees to open an RSA with any PFA of their choice. This means that they are not to be coerced or forced to register with a particular PFA by their employer. It is only if the employee refuses to open an RSA after 6 months of being in employment that the employer is given the power to open one for the worker with a desired PFA.
What you need?
Basically, what is needed is your personal information along with your biometrics and your employment details. The PFAs have a standard RSA form which is given to a prospective client to fill accordingly. Once this is done and submitted, the information will be processed, sent to PenCom and a unique RSA pin will be generated for the worker. In practice, this usually takes few days to complete. The entire process is FREE of charge.
In the Public sector
Usually, all persons employed in the public sector from June 2004, are expected to open an RSA upon employment. This therefore means that as a government employee, either at Federal, State or LG level you must open an RSA effective from June 2004 except if exempted.
In practice, except for the FG and some few States, other States have not fully keyed into the CPS. They are mostly at one stage or the other. To fully comply with the CPS as required by the PRA the concerned State is expected to pass a pension law, establish a pension bureau and must consistently remit pension contributions in accordance with the subsisting pension law which will be in line with the PRA.
Most of the States still do not have a subsisting pension law that align with the PRA. Some do not even have pension bureaus. Some still practice the old defined benefit scheme. As at now, only 6 states and the FCT have fully complied with the CPS by satisfying all the criteria stated above.
However, in practice, most of the government workers still open RSA, what is left in most cases is remittances of pension contributions.
As with the process in the private sector, the same applies to the public sector. However, in practice, what is obtainable is that in public sector settings, there’s a dedicated department or person that is responsible for ensuring that workers are enrolled with PFAs (usually they partner with couple of PFAs). Opening of RSA is FREE.
Having an RSA is beneficial to the worker. Opening one earlier is even better. This will ensure that the worker’s pension contribution remittances are fully accounted and promptly paid. This further enhances their benefits payments upon retirement.
Open an RSA today. It is free. It is your duty.