PenCom issues revised regulation for retirement benefits

The National Pensions Commission on Monday issued revised regulations on retirement and termination benefits for immediate implementation. The rule simplifies some difficulties and guides the process of access to retirement and termination benefits for contributors and retirees of the Contributive Pension Scheme. This is the first comprehensive review of the regulation since its initial issuance in 2007. The commission said the review has input from “key stakeholders” to ensure more efficient administration of retirement benefits. According to a commission statement on Monday, the revised regulation contains several new provisions on pension enhancement, voluntary contributions, temporary access to RSA due to job loss, payment under the Micro-Pension Plan, administrative penalties for violations by the Pension Fund Administrators (AFP). ), Among others. The regulation also introduces notable amendments to several existing provisions and provides more clarity on others. Highlights of the revised regulation include streamlining the documentation process, non-confirmation of employment status by employers, lump sum access, RSA consolidation prior to benefit payment. Documentation process Although the previous regulation described the documents required for retirees to access benefits, the revised regulation as a way to simplify the process has now ordered the AFPs to make efforts to ensure that all preparatory documentation for the pension holder’s retirement the Retirement Savings Account (RSA) must be loaned and held within four months prior to retirement date. “In order to ensure that prospective retirees are properly informed about ways to access their benefits, PFAs are also mandated to advise prospective retirees to check their websites and familiarize themselves with the CPS Retirement Packet that they provide. contains Planned Withdrawal (PW) and Retiree Withdrawal features. Life Annuity (RLA) for at least three months from the date of retirement. The package also contains other highlights that would guide retirees to a smooth retirement process.” Non-confirmation of employment status by employers Likewise, the revised regulations have simplified the provisions on the notification and documentation required to access RSA due to temporary job loss. Temporary job loss has been defined as a situation “in which an employee voluntarily retires, terminates, or is discharged before reaching the age of 50 and is unable to obtain other employment after four months of separation” . “The provision addresses situations where employers refuse to confirm the retirement or termination of their former employees. Prior to this review, an employer-issued resignation acceptance letter is required for a pension contributor requesting the 25 percent temporary job loss payment. However, the revised Regulation establishes that when the employer does not accept or refuses to accept the letter of resignation from the employee, the PFA will write to the employer confirming the resignation of the employee and will ensure that a copy of the acknowledgment of receipt is kept as proof of receipt. If the employer does not respond to the PFA inquiry within 30 days, the employer’s refusal is considered acceptance of the employee’s resignation for benefit payment purposes.” Payment of an additional lump sum Significantly, in terms of the lump sum payment, the revised regulation has clarified that retirees will be able to access an additional lump sum after the initial lump sum payment, provided there are additional inflows of funds into the RSA by employers. . However, the additional remittances will first be applied to increase the pension up to 50 percent of the retiree’s final salary, while the balance may be paid as a lump sum. When the retiree’s pension is already up to 50 percent of the final salary, the retiree can choose to collect all of the additional remittances as a lump sum. When the additional entry in the RSA of a Retiree Life Annuity on Retiree (RLA) is not up to 4100,000, the amount will be paid directly into the retiree’s bank account, subject to the approval of the Commission. RSA Consolidation Before Benefit Payment The revised Regulations have also clarified that the RSA must be consolidated before retirement benefits can be accessed. A retiree will only be eligible to access their retirement benefits by consolidating their RSA. The components of an RSA at retirement will consist of accrued pension rights or pre-law benefits (if applicable) for employees who were employed prior to the start of CPS, employer/employee pension contributions, investment returns, and fixed portion of voluntary contributions (if applicable). The new regulation requires the PFA to take the necessary steps to communicate with the employer and other relevant parties, to ensure that all the rights of a retiree or a deceased person are credited in their RSA in order to determine the final balance of the pension. RSA, before processing benefits. Accumulated pension benefits for private sector contributors In addition, the Revised Regulations have provided for the administration of Pre-Act Benefits, which are pension benefits accrued from contributors primarily in the private sector in accordance with the employer’s trust agreement prior to the start of the CPS in June 2004. Any employee who retires and has pre-act contributions must notify the AFP of their intention to withdraw the Pre-act balance. A PFA will ask the retiree to provide the necessary documents and an application to access the Pre-Act portion of the RSA balance. Consequently, the Pre-Act balance can be paid to the retiree separately, before selecting the Programmed Withdrawal or Annuity modes to access retirement benefits.” In Part II, we will continue our presentation on the highlights of the Revised Regulations on Retirement and Termination Benefits. Read More Related News Here Let here it in the comment below if you do have an opinion on this; PenCom issues revised regulation for retirement benefits