Pension Scheme Calculations In Nigeria, Your Employer Obligations

The importance of your pension funds to your retirement and old age cannot be overemphasized.
Some employees think it's inconsequential to them if employers do not remit this funds monthly and it simply explains how ignorant a lot of people are about employer obligations and retirement plans.
In fact, it is criminal for an organization not to remit this into your RSA i.e retirement savings account monthly.

The Pension Act 2014 (the Act) was signed into Law on the 1st of July 2014 to govern and regulate the administration of pension funds but has been reformed in the 2014 Pension Reform Act (PRA), signed into law on July 1 to accommodate new changes to make it better.

There are also others obligations your employer is required by law to do: Employee Rights In Nigeria

#Your employer is required by law to pay a percentage of your salary to your RSA monthly.
#Your employer is required by law to ensure that payment is done promptly.
#Your employer must not pay your pension in cash.
#You are not obligated to use your companies pension manager.

Pension breakdown:
1. Contribution rate will be 18% (10% for employers and 8% for employees).
i.e 8% of your salary would be remitted into your RSA while your employer would pay 10% of your salary.
2. The minimum employee threshold for mandatory participation is three employees, not 15, as in the text of the 2014 PRA. i.e companies with three employees must pay pension for their staff.
3. The total contribution rate is 18% regardless if the employer contributes on behalf of the employee but for employees, its 8% of their salary.

PENCOM has a compliance unit that enforces employers to pay deducted contributions into your RSA and if they default, there is a penalty of 2% of the deducted sum to the RSA for every 14 days it is withheld after deduction from your salary.

PENCOM also collects a fine of 1% of the same amount from the said employer?
So don't forget to mail or visit their office at 88A Oduduwa Crescent, Ikeja Lagos. Have your RSA statements, contract letter, payslips or any other proof of the under-remittance.

If your employer is defaulting in one of the list above kindly report using this number 0700-CALL-PENCOM (0700-2255-736266) or you can find more information here: PENCOM Nigeria

Please ask questions for clarity using the the comment section.

Image: financialwatchngr

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