The National Pension Commission has implemented measures to ensure the effective management of additional benefits provided to workers by their employers.
This initiative is outlined in a framework designed for the establishment of Additional Benefits Schemes under the Contributory Pension Scheme.
According to the framework, Section 4 (4) (a) of the Pension Reform Act 2014 permits employers to offer extra benefits to their employees upon retirement.
PenCom has emphasized that only institutions licensed by the National Pension Commission, as outlined in Sections 54 and 56 of the PRA 2014, are authorized to hold and manage pension funds and assets.
Section 59 of the same act stipulates minimum penalties for any violations of Sections 54 and 56.
In accordance with this framework, employers have the option to establish Additional Benefits Schemes (ABS) to facilitate the provision of supplementary benefits to employees when they leave their positions with the employer.
It is essential to note that ABS under the Contributory Pension Scheme (CPS) will be overseen by licensed Pension Fund Administrators, and the assets will be safeguarded by licensed Pension Fund Custodians, in alignment with the regulations set forth in the PRA 2014 and subject to approval by the commission.
In summary, this framework is issued to delineate the procedures for creating and managing ABS by employers, as a means to complement the retirement benefits offered to their employees under the CPS.
PenCom has also made it clear that any employer seeking to establish an ABS for their employees must demonstrate compliance with the provisions of the PRA 2014.
This includes up-to-date remittance of pension contributions, Group Life Insurance coverage for employees, and the execution of a portfolio management agreement with Pension Fund Administrators (PFAs) of their choice.
Furthermore, employers have the flexibility to appoint one or more PFAs to manage their ABS. In cases where multiple PFAs are chosen, a lead PFA should be designated, with notification provided to the commission.
