By Adedapo Adesanya
The National Pensions Commission (PenCom) has directed Pension Fund Administrators (PFAs) to discontinue the registration of Death Benefits Accounts (DBAs) for deceased employees under the Contributory Pension Scheme (CPS).
This is in line with its efforts to get more people still part of the working population to plan for retirement. According to a public notice released by the commission, the practice of opening such accounts was in conflict with the Pension Reform Act, 2014 (PRA, 2014).
Section 11(1) of the Pension Reform Act (PRA) 2014 mandates every eligible employee to maintain a Retirement Savings Account (RSA) with a Pension Fund Administrator of his/her choice.
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. Employers were then required to ensure that RSAs were opened for all their employees.
Before the establishment of the 2014 Act, Death Benefits Accounts (DBA) have been used by legal beneficiaries to access the benefits of the deceased employees who did not open RSA during their lifetime.
However, due to compliance with the statutory provisions of the PRA, PenCom says this practice would no longer be valid from next year.
The notice reads in part: “the general public is hereby notified that the processing of DBA for death benefits claims would be discontinued with effect from 1 February, 2020.
“All PFAs have been directed to stop the opening of DBAs with effect from 31 January, 2020.”
PenCom used the opportunity to emphasize the need for all employees to ensure that they open RSAs with any PFA of their choice, and this can be done by accessing the list of licensed PFAs which can be found on its (commission) website.
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