Pension Reform

One key institutional reform embarked upon by the Obasanjo Administration in furtherance of its economic reform agenda was the pension reforms. The National Assembly, in September 2004, enacted the Pension Reform Act of 2004 with the aim of revolutionizing pension management and administration in Nigeria. Prior to the enactment of the Act, pension administration in the country was characterized by:

• gross under funding
• inadequate benefits payment
• poor service delivery that often resulted in the impoverishment and death of contributors
• low compliance rate
• limited coverage

The Pension Reform Act

The Pension Reform Act was signed into law with the aim of:

• Ensuring that every employee receives timely retirement benefits.
• Instituting a mandatory culture of saving among workers.
• Establishing a uniform set of rules, regulations and standards for the administration of pension funds.

Features of the New Pension Scheme

• Contributory: The act provides for a joint minimum contribution of 15 percent of the employee's emolument by employer and employee. The rates vary from 7.5 percent each for employers and employees in the public and private sectors and 12.5 and 2.5 percent for employers and employees in military service
• Fully Funded: Deductions are made instantly and transferred to designated PFAs.
• Right of Choice: Employees have the sole right to choose which PFA should manage their pension funds.
• Government Regulation: The operation of the scheme is regulated by PenCom

Our Pension Custodian

The Pension Reform Act 2004 requires pension funds to be privately managed by Pension Fund Administrators, PFAs, while Pension Fund Custodians, PFCs, are licensed to keep the pension fund's assets. Our PFC is UBA Pensions Custodian, a subsidiary of UBA Group . www.ubapensions.com