Senate Okays National Pension Commission

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Senate Okays National Pension Commission

Richard Ihediwa, Daily Times Nigeria

March 12, 2004

The Senate yesterday endorsed the establishment of a 14-member National Pension Commission for the regulation of pension matters in the private and public sectors of the economy.

This followed the adoption of sections 1 to 14 of the Bill for an Act to establish contributory pension scheme for employees in the public service, Federal Capital Territory and the private sector.

The pension commission under the new law will have a part time chairman, a director-general who would also be the chief executive officer, four full time commissioners drawn from the six geo-political zones as well as seven part time, ex-officio members to represent interest groups.

The chairman and the director -General must possess a university degree or its equivalent with not less than 20 years cognate experience, and as well as the four full-time commissioners are to be appointed by the President with the confirmation of the Senate.

The seven part-time members would be the representatives of the Head of the Civil Service of the Federation, the Ministry of Finance, the Nigeria Labour Congress, the Nigeria Union of Pensioners, the Nigeria Employers’ Consultative Association, the Central Bank of Nigeria as well as two persons from the private sector to represent private sector independent interest.

Under the contributory pension scheme, a worker in the federal service is to contribute seven and a half per cent of his monthly salary while government as employer is to contribute 10 per cent of the same amount.

In the case of the military, the Federal Government is entitled to contribute 12.5 per cent while the employee is to contribute 5 per cent.

In other cases, which include the private sector, the pension law provides that the employer and the employee are to contribute a balanced minimum of seven and a half per cent each into the scheme.

An employee is to maintain an account (retirement saving account) in his name with any pension fund administrator of his choice where the contribution would be paid in, but is not entitled to make any withdrawals from the account until he retires.

Under the new law, any employer who fails to remit the contributions within the prescribed time would be liable to a penalty not less than two per cent of the total contribution that was unpaid.

Non-participants from the scheme include those who are already entitled to retirement benefits under any existing pension scheme and who have three or less years to retire from service.