The roundtable took place on the 26th  of May 2015 and was well attended by both internal and external participants. Seven lead discussants were present to lead the discussion on Pension Reform Administration in Nigeria. The roundtable touched on the following: Pension Reform System 2004 to 2014: what worked and what had to change; Pension Assets and Regulatory Framework for funds Investment; The Challenges of Higher Contributory savings for Employers: The More You Give the Less You Employ; and Sanctions Regime of The Pension  System.

The need to ensure retirees have something to fall back on at retirement gave rise to the issue of pension which both the private and public sector bought into as far back as the 50’s. It was in year 2004 that it was realized that what was obtainable was no longer sustainable and the government realized the need for a change in the 2004
Pensions Act. The loopholes in the 2004 Act informed the introduction of the 2014

Pension  Reform  Act  which  made  provisions  for  uniform  Contributory  Pension Scheme and also increased the monetary contribution from 15% to 18%. The new Act also provided for a uniform means of providing pension funds for the three tiers of government and also gives the power to sanction irregularities and non- compliance with the Pension Act.

The new pension system is transparent as individuals can monitor their pension funds and also have easy access to their pension fund account.  Necessary checks and balances are present in the system as there are different operators involved in each role.

1.  The 2014 Pensions Act has given people the opportunity to make a choice from the four types of withdrawals available (lump sum withdrawal, monthly/quarterly withdrawal, program withdrawal and annuity withdrawal).
2.  The program withdrawal allows that the number of years and the amount in the  retirement savings account determines the  amount individuals  will be entitled to.
3.  Annuity is for life and it is more expensive. This means that the program can run throughout the life span of the owner.
4.  Having a pension in place will not only encourage workers, it would also encourage savings, ensure timely payment, as well as assist in catering for the elderly at their old age.
5.  Employees can open Retirement Savings Accounts (RSA) of their choice.

6.  Pension funds are not open to employers and custodians of these pension funds are mandated under the Act to guarantee the funds kept in their care.
7.  The Act also allows the custodians to invest the pension funds, however the investment must be a traditional zero risk financial type. Employers do not have power over the pension fund neither do they dictate how it is being paid or invested.
8.  Employer eligibility under the Pension Reform Act 2014 was reduced from a minimum of 5 to 3.
9.  Pension funds can only be accessed upon retirement or attainment of the age of 50 years.
10. Even though the waiting period to access the pension fund is 50 years age mark, however upon evidence of loss of job within a period of 4 months, individuals can access their funds. The exception to the right of access of individual who is out of paid employment is resignation. An individual who willingly resigns from his/her paid employment cannot be eligible to draw from the pension funds.
11. Giving inflation, 15% of salary as a monthly contribution has been increased to 18%. A worker contributes 8% while the employer contributes 10%.
12. The RSA balance can only be used as collateral for housing loans which can be up to 25% of the funds.
13. The  principal  of  the  pension  funds  for  voluntary  contributors  is  tax  free.

However personal income tax is now imposed on monies paid in by voluntary contributors, if such money is subsequently withdrawn by the owners. It was discovered  that  voluntary  contributors  use  this  pension  scheme  to  avoid paying tax.
14. In respect of treatment of deceased employee, the pension fund is now paid to a named beneficiary by the underwriter.
15. The  2014  Act  has  also  mandated  that  the  state  government  and  local governments be involved in the new pension scheme. In the 2004 Act, state government participation was not made compulsory.
16. The  Act  improved  corporate  governance  through  introduction  of  stringent measures by The National Pension Commission (PenCom).
17. The level of compliance has increased due to the action of Securities and

Exchange Commission (SEC) and PenCom.

18. The Act also ensures that the pension funds are not mismanaged by the pension administrators through involvement in high risk investments.
19. In order to also guarantee the safety of the pension funds as well as ensure returns  on  investments  made,  the  custodians  in  charge  of  the  funds are supervised and regulated by stating the market where investment should be made and ensuring that only one body instructs the custodians about the usage of the funds. The actions of the custodians are also subject to prior approval.
20. No third party collection is allowed under the 2014 Act. The IRA funds are for those in active service and only withdrawn by retirees only.
21. PenCom’s duty is to ensure prompt remittance of money by the employers to the employee’s pension account.
22. PenCom as an entity has been established to regulate the custodians and ensure they comply with the provisions of the Act. PenCom ensures the safety of the funds and monitor the type of investments made by the custodians.
23. PenCom ensures fair returns of investments which could be in bonds, shares, debentures, bank securities and any other investment guaranteed and authorized by the Central Bank of Nigeria and SEC.
24. The  Act  gives  PENCOM  the  power  to  sanction  the  custodians  for  any irregularities or   non-compliance with the Pensions Act.Sanctions among others include: warnings, cautions, fines, naming and shaming etc.
25. Administrative ways of ensuring compliance with the Act by PenCom include: Removal of directors, Dissolution of boards of directors of PFA’s and Appointment of interim management boards.
26. In situations where administrative sanctions fail, legal action is resorted to which can be in form of civil or criminal proceedings through the National Industrial Court.
27. In case of failure of the employers to make the proper remittance after 5days of payment of salaries, such employer would be fined.   In order to ensure compliance agents are appointed to  look into  the  issue  of payment. The national industrial court also helps in collection of unremitted funds.
28. Resort  is  made  to  criminal  proceedings  in  cases  of  diversion  of  funds, mismanagement of pension funds. Punishment imposed includes payment of thrice the amount of funds mismanaged.  Also attempt to mismanage is also regarded as a criminal act with fines of up to 3 times the funds and also a jail term of 10 years or both.
29. If the offence is committed by corporate entities, the directors and principal officers of such company who have knowledge of the offence would be punished in addition to the punishment of the company as an entity.


1.  The retirees should have the option of either program withdrawal or annuity.

Annuity is life assurance and accordingly holders of a program withdrawal should be allowed to withdraw for a period of 10 years and thereafter switch to the annuity withdrawal for the remaining years.
2.  PenCom must be alert to its duties, although the government also has a role to play with respect to the economy.
3.  Every investment made or to be made must be carefully thought out, planned and investigated.
4.  Proper sensitization of the personnel involved as to their roles and duties.