The National Pension Commission has introduced measures to ensure that additional benefits introduced for workers by employers are well managed.
It disclosed this in a framework 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 allowed the payment of additional benefits to employees upon retirement by their employers.
PenCom said Sections 54 and 56 of the PRA 2014 permits only institutions licensed by the National Pension Commission to hold and manage pension funds and assets, while Section 59 stipulates minimum penalties for contravening Sections 54 and 56 of the PRA 2014.
In line with the framework, employers may set up ABS to allow for the payment of additional benefits to its employees upon exit from the services of the employers.
It stated that, “The ABS under the CPS shall be managed by licensed Pension Fund Administrators, and the assets kept in the custody of licensed Pension Fund Custodians, in line with the provisions of the PRA 2014 and subject to the commission’s approval.
“Accordingly, this framework is issued to outline the modalities for the establishment and management of ABS by employers, in complementing the retirement benefits of their employees under the CPS.”
PenCom stated that an employer that wished to establish an ABS for its employees must be required to show evidence of compliance with the provisions of the PRA 2014 in terms of up-to-date remittance of pension contributions for its employees, Group Life Insurance cover for employees and execution of portfolio management agreement with PFAs of its choice.
It added that an employer may appoint one or more PFAs to manage its ABS.
Where an employer appoints more than one PFA, a lead PFA should be appointed and the commission informed, it added.
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