Olajumoke, age 44, worked in one of the medium-sized
deposit money banks in Lagos, as a senior manager before he resigned
late last year following a major restructuring that affected more than
40 percent of the staff in his bank.
When the restructuring got to Olajumoke’s department, the
treasury, he was asked to resign by himself, but thinking it would mean a
disgraceful exit to request sacking, he resigned by himself and left
for his house. The bank, however, has since paid him his terminal
benefit even though that has not been enough to carry him for long
because he had not secured another job since then.
By his position in the bank, Olajumoke had a huge amount of money
(pension fund) in his Retirement Savings Account (RSA) in excess of
N13m having been enrolled in the Contributory Pension Scheme (CPS) since
2006, following the coming on board of the Pension Reform Act 2004,
which was recently reversed in 2014.
After eight months of been out of job and yet to secure a
new one, Olajumoke considered raising some capital to start his own
business, to at least to take care of his family and pay his bills,
which were gradually becoming a serious problem for him.
But realising he had some huge money in his Retirement
Savings Account with one of the Pension Fund Administrators (PFAs), he
was sure that he could get the allowable 25 percent of the amount in
pension contribution as unemployment benefit.
The pension reform act provides that a holder of a
retirement savings account on request, withdraw a lump sum of money not
more than 25 percent of the amount standing to the credit of the
retirement savings account, provided that such withdrawals shall only be
made after three months of such retirement and the retired employee
does not secure another employment.
On getting to the PFA the following day and presenting his
request with documents as evidence that he has been out of job for a
while, Olajumoke was shocked when the Benefit’s offer of his PFA told
him he was not suppose to resign by himself.
“You should have allowed your employer to sack you if you
wanted to access this benefit because it does not take care of those who
opted for voluntary resignation,” he was told. Olajumoke wept seriously
because he had committed a serious blunder to have chosen to resign
himself rather than allow his employers to sack him.
When an employee resigns, he or she cannot get 25 percent of the contribution as unemployment benefit.
A lot of organisations are used to asking their staff
particularly senior managers resign rather than sacking them. It is good
for the sake of pride, but note, that you cannot get the 25 percent of
your pension benefits should you not secure another job after three
months and need some money to take care of your bills or start up a
business.
It is important that people realise this, by knowing that
their employer must sack them for them to get 25 percent of the amount
standing in their RSA. If your employer tells you to resign, tell him to
sack you for it is better than forceful resignation. This is called
compulsory retirement.
Compulsory retirement
Compulsory retirement occurs when an employee is being
disengaged or terminated from active service in accordance with the
terms and conditions of service, before attaining the age of 50 years.
This category of retiree can only access up to 25 percent
of the balance in their RSA three months after disengagement; the
remaining balance can be accessed after the retiree attains 50 years of
age through a lump sum and programmed withdrawal or annuity.
An RSA holder who retires compulsorily before the age of
50 and who wishes to apply for 25 percent of his RSA balance shall
provide copies of the following documents: completed application form;
official notice of retirement issued by his/her employer; a document
confirming that the retirement is in accordance with terms and
conditions of his/her employment; last pay slip or evidence of total
annual remuneration; evidence of any accrued pension
rights/acknowledgement of indebtedness (if an employee in the private
sector or a self-funded government organisation), as well as any
outstanding pension contribution.
Means of identification will include national
identification card; valid international passport; valid driver’s
license; letter of confirmation of identity from his/her bank or notary
public; bank account details including name of bank, branch or location
of bank, account number, account name, evidence of account, one passport
photograph, birth certificate or age declaration.
The objectives of the Pension Reform are to ensure that
every person who worked in either the Public Service of the Federation,
Federal Capital Territory or Private Sector receives his retirement
benefits as and when due; as well as to assist individuals by ensuring
that they save to cater for their livelihood during old age and thereby
reducing old age poverty; and also to ensure that pensioners are not
subjected to untold suffering due to inefficient and cumbersome process
of pension payment.
It also aims at establishing a uniform set of rules,
regulations and standards for the administration and payments of
retirement benefits for the public service of the federation, federal
capital territory and the private sector and stem growth of outstanding
pension liabilities.
Modestus Anaesoronye
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