25% TO THE RESCUE

Have you had to tighten your belt in the past couple of months? Seen prices go up the roof of late? Recently unemployed thus worried about the future and rising prices?

Don’t worry, you are not alone.

With the price of crude crashing, times have not particularly been great for oil exporting countries like our beloved nation, Nigeria.  With our revenue inflow dropping, the almighty dollar becoming scarce (and expensive), and the hike in cost of goods and services.

Oh, and who bears the brunt of all of this? The consumer – you and I of course.

Guess what? It doesn’t stop there. Amidst these financial crisis, we’ve found ourselves dealing with the COVID-19 virus outbreak, a virus whose spread can be best combated by limiting or avoiding physical interaction. Consequently, across the country, we’ve seen lockdown orders enforced with the ripple effect of many businesses shutting down and more people becoming unemployed.

Are you relating to this scenario?  We may just have some good news for you.

Before we get into that, do you have a pension plan?

We hope so because the Pension Reform Act 2014[1] established a Contributory Pension Scheme[2] (CPS) which requires employers of at least 3 persons to remit at least, 18% of each employee’s wages every month as pension contribution (savings). The  10% portion of the contribution is from the employer and 8% from the employee[3]. This is  deducted at source and remitted to a Pension Fund Administrator like yours truly… Sigma Pensions every month. This is a statutory obligation on the part of the employer, failing which penalties may be imposed and legal action may also be taken against such an employer[4].

Now, let’s imagine that your Pension Fund Administrator is Sigma Pensions Limited, we’ll  just shorten to “Sigma”, Sigma receives the contributions, invests these contributions in fixed and variable income assets (the extent of exposure, being subject to your Fund class and risk appetite) so that at that point when you are due to retire, your pension contributions would have earned loads of  interest.

Our activities, including the management of your pension contributions, are subject to oversight by the National Pension Commission (PenCom) who have laid out strict investment guidelines which PFAs across the country must comply with.

While the primary objective of pensions is to provide for you after retirement/in old age, one of the great things about the PRA 2014 is that it envisaged  a time like now where many people have found themselves out of work and without a means of income.

If you have voluntarily retired or disengaged or have been disengaged from employment for at least 4 months[5], with approval from PenCom, you can have access to  25% of the total amount in your Retirement Savings Account (RSA) with your PFA.

It is however important that we note that your application to access this portion is subject to approval from PenCom. In essence, eligibility is tied to your compliance with industry requirements e.g. being recaptured in line with the ongoing Data Recapture exercise (Click here Recapture your Data online ). It is therefore  important that you participate in such industry exercises which your PFA would regularly update you with.

So, have you been out of work for at least 4 months and have a business you want to start or invest in? Now you can access some funds towards the start-off. Or do you have an emergency at hand and strapped for cash? Now you have something to fall back on.

However, remember the primary requirements:

  1. That you have a Retirement Savings Account (RSA) opened with a Pension Fund Administrator (PFA) of your choice. You will have been issued a Personal Identification Number (PIN) at the point of opening.
  2. You must have provided your employer with your PFA details as well as your PIN to facilitate monthly remittances of your pension contributions.
  3. Monthly remittances (18% of your gross monthly remunerations) must have been made to your RSA
  4. You must have been out of employment for at least 4 months
  5. You must be compliant with industry standards/requirements/exercises

Have you ticked all these boxes? If yes, then way to go! Even better, if you are our customer, we are glad to inform you that our services are still running as normal despite restrictions on movement and congregation. While the opening of our branch offices across the country will be phased  as part of our measures to curb the spread of the COVID-19 virus, we encourage all our customers to take advantage of our self-service options (Sigma Buddy application, USSD Code, Nafi chatbot on Whatsapp etc.) to check your RSA balance and even apply to access benefits such as the 25% of the RSA balance. You can also get in contact with us via telephone and email where a member of our team will be glad to assist and give you all the information you need.

Paying for an online course to improve your skills? Investing in a start-ups? Wondering how to manage money? We have a range of ideas you may find useful on our Sigma Clique.

Whether or not you choose to access this money is ultimately your choice, and there is nothing wrong with leaving your balance to simply keep growing. Infact, we would advise that if the situation is not dire, do not seek to withdraw from your pension account and allow the funds continue to grow – we can assure you that at retirement, you will be happy you made this choice.

Nevertheless, if and when you do choose to access part of your retirement savings account balance,  your PFA should be ready to guide you through the process. For our customers, you may walk into any of our branches (once we are re-opened) or simply get in contact with us via email, telephone or any of our self-service options.

Want to find out more about our services? Simply click to visit our website.

Stay Safe.

[1] Pension Reform Act 2014

[2] Ibid. Section 3

[3] Ibid Section 4(1)

[4] Ibid Section 99

[5] Ibid Section 7(2)