• What is this new pension scheme?
  This new pension scheme is contributory, fully funded, privately managed, third party custody of the funds and assets and based on individual accounts. It ensures that everyone who has worked receives his/her retirement benefits as and when due.
• Who is covered by the new pension scheme?
  The new pension scheme covers all employees in the public service of the Federation, the Federal Capital Territory and the private sector of the economy.
• Who is exempted from the new pension scheme?
  The existing pensioners, employees who have 3 years or less to retire and the categories of persons covered by the provisions of section 291 of the Constitution of Federal Republic of Nigeria 1999 are exempted from the new pension scheme.
• Does an employee who has 3 years and 1 month to retire come under the old scheme or the new scheme?
  Any employee with more than 3 years to retire comes under the new pension scheme.
• Is the new pension scheme mandatory for all catergories of employers and employees covered under the act?
  The new pension scheme is mandatory for all categories of employers and employees covered under the Pension Reform Act.
• Is the private sector pension being merged with the public sector?
  There is no merger of private sector pension with that of the public sector pension since the sources of funding are not the same. However, both are now being regulated under the same rules and regulations.
• What is the main objective of the new pension scheme?
  One of the main objectives of the pension reform is to ensure that every person that worked in either the public or private sector in Nigeria receives his/her retirement benefits as and when due.
• How is the new pension scheme different from the old pension scheme?
  Most of the old pension schemes were not fully funded. Therefore, upon retirement, there were no ready funds to pay the pensioners. The new pension scheme is fully funded. Money is contributed into individual employee`s Retirement Savings Account (RSA) and when he/she retires, there will be money in his/her RSA to pay his pension.
• Will private sector pension schemes be allowed to continue?
  Private sector pension schemes will be allowed to continue provided if there is evidence to show that the pension scheme is fully funded at all times, any shortfall made up within 90 days, pension funds assets are segregated from the assets of the employer/company, the pension funds assets are held by a licensed Custodian and the scheme is specifically approved by the National Pension Commission.
• How much will an employee contribute into the new scheme?
  An employee shall make monthly contributions of a minimum of 7.5% of the total of his/her monthly emoluments (i.e., monthly basic salary, transport allowance and housing allowance) into his RSA.
• Will my employer also contribute?
  The employer shall contribute a minimum of 7.5% of the employee`s monthly emoluments towards the retirement benefits of the employee.
• Can the employer make the total contributions on behalf of the employee?
  An employer can make all the contributions on behalf of the employee without making any deduction from the employee`s salary except that such contribution by the employer shall not be less than 15% of the monthly emoluments of the employee.
• Will the contributions lead to a decrease in my monthly emoluments?
  Your contributions are just savings out of your emoluments towards your old age and the employer`s contribution will only increase such savings.
• Are pension contributions paid to the PFA?
  Pension contributions are paid directly to the PFC to be held on the order of the PFA.
• What does fully funded pension scheme mean?
  A fully funded pension scheme exists where pension funds and assets match pension liabilities at any given time.
• What is a retirement savings account (RSA)?
  Every employee or contributor under the new pension scheme is expected to open RSA in his/her name with a PFA of his/her choice into which all his/her contributions and returns on investment are paid.
• Is the RSA operated like a bank account?
  The RSA is similar to a bank account except that no contributor can withdraw money from the RSA before his/her retirement. The PFA is required to invest the money and issue statements of account at least once every quarter to the contributor.
• How does movement from one employment to another affect pension?
  Movement from one employment to another does not affect pension under the new scheme. The reform has removed the bottleneck associated with transfer of service from one organisation or sector to another, especially with regard to qualification for pension and the sharing formula for payment of pension as between employers.

• ARE PENSION CONTRIBUTIONS TAX FREE?
  Contributions to the new pension scheme are tax free.
• WILL TAX BE PAID ON THE PROFIT MADE FROM TRADING WITH THE MONEY IN THE RETIREMENT SAVINGS ACCOUNT (RSA)?
  Tax will be paid on the profit made from trading with the money in the Retirement Savings Account.
• HOW WILL I BENEFIT FROM THE NEW PENSION SCHEME?
  The new pension scheme will ensure that you receive your pension after retirement without any delay.
• HOW WILL THE NEW PENSION SCHEME HELP THE ECONOMY?
  There will be a huge pool of long-term funds available for investments, which will lead to national economic development.
• HOW CAN I KNOW WHAT IS HAPPENING WITH MY MONEY?
  Pension Fund Administrators (PFAs) will issue regular statements of accounts and profit from investments to the employees.

• HOW CAN I BE SURE THAT MY CONTRIBUTIONS ARE SAFE?
  All those managing or keeping custody of pension funds and assets will be licensed and continually regulated and supervised by the National Pension Commission.
• WHAT IS THE GUARANTEE THAT THE PENSION FUNDS UNDER THE NEW SCHEME WILL BE WELL MANAGED AND NOT DIVERTED FOR OTHER PURPOSES?
  The functions of the Pension Fund Administrator (PFA) and Custodian are clearly spelt out in the Pension Reform Act 2004. The Act provides adequate safeguards against the misuse of the pension funds and assets by any operator.
• WHAT HAPPENS IF A PFA FAILS OR IS LIQUIDATED?
  The pension funds and assets in the Retirement Savings Account (RSA) are kept by the PFC and as such the liquidation of the PFA will not affect the funds and assets. Besides, every PFA is expected under the Pension Reform Act 2004 to maintain a statutory reserve fund as contingency fund to meet claims for which it may be liable as may be determined by National Pension Commission.
• WHO CAN I COMPLAIN TO IF I HAVE A PROBLEM WITH A PFA?
  The Pension Reform Act 2004 allows any employee to complain about any PFA to the National Pension Commission.
• WHAT IS THE ROLE OF THE GOVERNMENT IN THE NEW PENSION SCHEME?
  The Federal Government has established the National Pension Commission and charged it with the responsibility of regulating and supervising new pension scheme.
• CAN THE GOVERNMENT TAKE OR USE THE MONEY IN MY RSA FOR ANY PURPOSE?
  The Government cannot tamper with the pension funds in your RSA, because the Government cannot have access to the account. Besides, the Government is primarily concerned with ensuring the safety of the money in your RSA through the enforcement of strict rules and regulations.
• WILL INFLATION AND DEVALUATION OF THE NAIRA NOT ERODE THE VALUE OF THE PENSION CONTRIBUTIONS?
  It is the duty of the PFAs to administer the contributions and invest in such a way that will ensure safe and reasonable returns on investment. The reserve fund created by the PFAs under the Act would compensate for any erosion of the value of the contributions.
• HOW IS COMPULSORY OR VOLUNTARY RETIREMENT ESPECIALLY IN THE ARMED FORCES TO BE HANDLED UNDER THE NEW SCHEME, IF THIS HAPPENS BEFORE THE AGE OF 50 YEARS?
  Under the Pension Reform Act 2004 a person can voluntarily retire or be compulsorily retired before the age of 50 years on the ground of medical advice, permanent disability or due to particular terms and conditions of employment. If any person retires under any of the foregoing circumstances, he is entitled to withdraw from his RSA even though he was under the age of 50 at such retirement; provided that, in the case of retirement due to particular terms and conditions of employment, the contributor does not secure another employment after six months from the last employment.
• WHAT IS THE MINIMUM OF PENSION GUARANTEED UNDER THE NEW SCHEME?
  The minimum pension guarantee shall be determined from time to time by the National Pension Commission.
• IS THERE ADEQUATE REPRESENTATION OF ALL STAKEHOLDERS ON THE BOARD OF THE COMMISSION, OR IS IT DOMINATED BY GOVERNMENT APPOINTEES?
  There is adequate representation of relevant stakeholders in the Board of the National Pension Commission, which comprises of representatives of the Government, Nigeria Labour Congress, the Nigerian Union of Pensioners and the Nigerian Employers` Consultative Association.
• DOES THE PENSION REFORM ACT REFLECT THE APPLICATION OF THE PRINCIPLES OF TRANSPARENCY AND ACCOUNTABILITY?
  Yes. The new pension scheme entrenches the principles of transparency and accountability as reflected in the reporting requirement of the PFAs and PFCs to both the contributor and the National Pension Commission. An employee has the right to choose who manages his RSA and the right to receive statements of his account on quarterly basis with details of contributions made and returns on investment.

• HOW WILL THE MONEY CONTRIBUTED BE MANAGED?
  The total contributions will be paid out by the employer directly to a Pension Fund Custodian and will be managed and invested by the Pension Fund Administrator (PFA) of the employee`s choice.
• HOW IS THE NEW SCHEME TO BE REGULATED?
  The National Pension Commission is empowered by the Pension Reform Act 2004 to supervise and regulate new pension scheme.
• WHAT ARE THE MAIN FUNCTIONS OF THE NATIONAL PENSION COMMISSION?
  The National Pension Commission issues licences to PFAs and Custodians, regulates their activities and generally formulates, directs and oversees the overall policy guidelines on pension matters in Nigeria.
• WHO IS A PENSION FUND ADMINISTRATOR (PFA)?
  A Pension Fund Administrator (PFA) is a company licensed by the National Pension Commission to manage and invest the pension funds in the employee`s Retirement Savings Account (RSA).
• HOW DO I KNOW WHICH PFA TO CHOOSE?
  The National Pension Commission will publish a list of all licensed PFAs and make it available to the public.
• CAN A PFA HAVE ACCESS TO THE MONEY IN MY RSA?
  The Pension Fund Administrator cannot collect or spend the pension money in the RSA.
• WHO IS A CLOSED PENSION FUND ADMINISTRATOR (CPFA)?
  Any employer managing its existing pension scheme before the enactment of the Pension Reform Act 2004 may apply to the National Pension Commission to be licenced as a Closed Pension Fund Administrator to continue to manage such pension scheme. A closed PFA cannot open or manage RSA for employees other than its employees or employees of its parent company if it is a subsidiary.
• WHO IS QUALIFIED TO BE LICENCED AS A CLOSED PFA?
  Any employer having existing pension fund assets worth N500,000,000 or more who also meets the requirements of the Pension Reform Act 2004may apply to the National Pension Commission for a closed PFA licence to enable it manage the pension funds of its employees directly or through its subsidiary.
• CAN ANY EMPLOYER BE ALLOWED TO CONTINUE TO MAINTAIN ITS EXISTING SCHEME IF THE TOTAL ASSETS IN THE SCHEME IS LESS THAN N500,000,000?
  Any employer with existing scheme of less that N500,000,000 can still maintain the scheme but the scheme will have to be administered by a PFA separate from the organisation.
• IS IT ONLY EMPLOYEES THAT JOIN AN ORGANISATION AFTER THE COMMENCEMENT OF THE PENSION REFORM ACT THAT CAN ELECT TO OPT OUT OF A CLOSED PFA?
  Every employee may decide to join the contributory pension scheme or move his RSA from a closed PFA to a PFA of his choice subject to such rules and regulations as may be issued by the National Pension Commission.
• CAN A SUBSIDIARY COMPANY APPLY AS A CLOSED PFA
  A subsidiary of any company may apply for licence to operate as a Closed PFA provided it satisfies the requirements of the Pension Reform Act 2004.
• CAN A NEW MULTINATIONAL COMPANY WITHOUT AN EXISTING PENSION FUND BUT WITH CAPACITY FOR FULLY FUNDED DEFINED BENEFIT PENSION SCHEME APPLY AS CLOSED PFA TO MANAGE THE PENSION OF ITS EMPLOYEES?
  In accordance with the provisions of the Pension Reform Act 2004, only an employer with a pension scheme existing before the commencement of the Act can apply to be licensed as a closed PFA.
• WHO IS A CUSTODIAN?
  A Pension Fund Custodian (PFC) is a company licensed by the National Pension Commission to keep pension money and assets in the RSA on trust for the employee on behalf of the PFA.
• WHAT IS THE DIFFERENCE BETWEEN A PFA AND A PFC?
  The PFA manages and invests the pension funds while the PFC keeps the pension funds and assets in safe custody and carries out transactions on behalf of the PFA.
• WHAT ARE THE MINIMUM FINANCIAL REQUIREMENTS FOR A PFA OR A PFC LICENCE?
  An applicant PFA must have a minimum paid up share capital of N150,000,000 while an applicant PFC must have a minimum paid up capital of N2,000,000,000 and shall be a licensed financial institution with a minimum net worth of N5,000,000,000 unimpaired by losses and has total assets of N125,000,000,000 or is wholly owned by a licensed financial institution with similar financial resources.
• CAN I MOVE MY ACCOUNT FROM ONE PFA TO ANOTHER?
  An employee or contributor has the freedom to move his account, once a year, from one PFA to another without giving any reason(s).
• WILL THE PFA CHARGE FEES FOR THEIR SERVICES?
  The PFA will charge fees for the services being rendered on the RSA subject to such guidelines as may be issued by the National Pension Commission from time to time.
• WHY ESTABLISH NEW COMPANIES TO BE LICENCED AS PFAs AND PFCs?
  In order to ensure the safety of pension funds and to avoid mixing pension business and other businesses, it is desirable that the operators deal with pension funds only. This will enhance effective regulation and supervision.