PenCom: Dead Retirees To Forfeit Pension Arrears
The National Pensions Commission (PenCom) has disclosed that dead retires who did not have a Retirement Savings Account (RSA) during their lifetime will have to forfeit their arrears.
The commission disclosed this in a public notice which directed all Pension Fund Administrators (PFAs) in the country to stop the registration of Death Benefits Accounts (DBAs) for deceased employees under the Contributory Pension Scheme (CPS).
According to the pension regulator DBAs registration is not in line with the Pension Reform Act, 2014 (PRA, 2014) as it has been used previously by legal beneficiaries to access the benefits of the deceased employees who did not open RSA during their lifetime
Citing Section 11(1) of the PRA 2014 the commission noted that the Act requires every eligible employee to maintain a RSA with any Pension Fund Administrator.
The Act also mandates every employer to open a nominal RSA within six months of assumption of duty for the employee who fails to open an RSA in accordance with section 11(5) of the PRA 2014.
Following the requirement in the Act the commission has said with effect from 1 February, 2020 processing of DBAs for death benefits claims would be discontinued.
It directed that all PFAs have to stop the opening of DBAs with effect from 31 January 2020. “
“Pursuant to the above-cited statutory provisions, this practice is no longer valid,” PenCom said as it called on employers to ensure that RSAs are opened for all their employees.
The Commission has however reiterated the need for all employees to ensure that they open RSAs with any PFA of their choice.