Business News of Friday, 10 February 2017
Under the National Pensions Act, 2008 (Act 766), the Social Security and National Insurance Trust (SSNIT) is mandated to manage the 1stTier Pension Scheme also called the Mandatory Basic National Social Security Scheme which incorporates an improved system of SSNIT benefits, mandatory for all employees in both the private and public sectors.
Under this arrangement SSNIT is also mandated to pay only monthly pension.
However workers would now receive their enhanced lump sum from the 2nd Tier Contributions which is also called 5% benefits under the Occupational or Work-Based Scheme managed by licensed Corporate Trustees.
This scheme is also mandatory to all formal sector employees and designed primarily to give contributors higher lump sum benefits than previously available under the SSNIT pension scheme.
Who qualifies for 5% benefit?
To qualify for 5% benefit, you must be 49 years or below as at 1st January, 2010
Workers who do not satisfy the minimum 240 months (20 years) contributions period under the old P.N.D.C.L. 247 may opt to be retired under the National Pensions Act, 2008 (Act 766) in order to enjoy a monthly pension. In this regard, such a worker may qualify for the 5% benefit.
It is however important to state that following the implementation of the 3-tier pension scheme, it was realised that most contributors who were 50 years and above were short-changed due to the meagre 5% benefits they received when they retired.
As a result of this, sections of the Act 766 were amended which reduced the qualification age for 5% benefits to 49 years as at 1st January, 2010 and exemption age from 55years to 50years (i.e. contributors who were 50years and above as at 1st January, 2010 were exempted from joining the scheme).
How to access the 5% benefits
After satisfying the above-mentioned conditions, you would have to furnish the NPRA with the following documents;
Pension Payment Advise given to you by SSNIT.
Recent passport size picture
Photocopy of your national ID (i.e. Voter ID, NHIS Card, Passport, Driver’s Licence or National Identification Card)
Fill and complete a Claims form at any of the NPRA offices
After the submission and completion of the beneficiary forms, the forms will be processed and your benefits would be paid into your bank account number that you will submit to the NPRA.
The author is with the National Pensions Regulatory Authority (NPRA)