On July 1st, 2014, President Goodluck Jonathan signed into law the Pension Reform Act 2014, which replaces the old Pension Reform Act of 2004. `This 2014 version of the 2014 Act has introduced some major changes that will affect you and your pension contributions.
Here are 7 things you should know about the 2014 Pension Reform Act;
- The new law is applicable to all employees of public sector organizations and private sector companies with a minimum 15 or more employees.
- The new law increases the minimum contribution from 15% to 18% with the employer expected to make a minimum contribution of 10% of the employee’s total monthly emolument and the employee making a minimum of 8% of his or her monthly emolument. The definition of ‘monthly emoluments’ has been expanded to mean the total emolument as defined in the employee’s contract of employment provided it is not less than the total of the employee’s basic salary, housing and transport allowance.
- The law permits that the Employer can take on the responsibility of making full contribution but where this is the case, the employer’s contribution should not be less that 20% of the employee’s total emolument
- There must be a Group life Insurance cover maintained on behalf of all employees under the pension scheme and this should not be less than three times the employee’s total annual emolument
- Any person who misappropriates pension funds risks a 10 year jail term and forfeiture of all properties to the Federal Government.
- Any employee that is sacked or resigns from employment before the age of 50 and is unable to get another job within four months is allowed to withdraw not more than 25% of his or her outstanding balance in the retirement savings account.
- The act exempts all interests, profits, dividends, investments and incomes on pension investments from any taxes
For a detailed review of the new pension act see;
And this is a link to the new Act