The National Pension Commission (PENCOM) is the regulatory body in Nigeria responsible for the implementation and supervision of the Contributory Pension Scheme (CPS). PENCOM ensures that employers and employees contribute towards retirement savings, providing a structured system for pension administration and the ultimate welfare of employees upon retirement. Registering with PENCOM and complying with the CPS is a legal requirement for eligible employers in Nigeria.
REGISTRATION COST: FREE
CONTRIBUTIONS:
✅ Employer: Minimum of -% of the employee’s monthly emolument.
✅ Employee: Minimum of -% of the employee’s monthly emolument.
Illustrative Contribution for Small Companies: While the actual contribution is a percentage of each employee’s salary, for estimation purposes, it might translate to around ₦- per year for small companies (for a maximum of 3 years for newly incorporated businesses). New businesses are only required to commence contributions from their year of incorporation.
REQUIREMENTS:
Company Information:
✅ Company Name:
✅ Company Address:
✅ Year of Incorporation:
Requirement:
✅ Certified list of employees of the organization as at the end of the last fiscal year. (The certification should include an authorized official stamp of the applicant organization).
✅ Certified rate of monthly pension contribution, clearly specifying:
Employer’s rate (minimum of -%).
Employee’s rate (minimum of -%).
✅ Evidence of remittance of monthly pension contributions for all employees for the last 3 fiscal years for organizations that have been in existence for that period.
✅ For organizations not in existence for the last 3 years, evidence of remittance of pension contributions from the date of incorporation/registration/licensing.
✅ Evidence of remittance of all outstanding pension contributions and any associated penalties.
✅ Evidence of transfer of pension fund and assets (if applicable), demonstrating transfer to a licensed Pension Fund Operator (PFO) prior to the commencement of the Contributory Pension Scheme.
✅ Evidence of a current Group Life Insurance Policy procured for the staff of the organization, clearly stating the number of employees covered and the sum assured.
REASONS FOR OBTAINING PENCOM REGISTRATION AND COMPLYING WITH THE CPS
Complying with the Contributory Pension Scheme and registering with PENCOM is crucial for several reasons:
✅ Legal Mandate: The Pension Reform Act of 2014 mandates all eligible employers in Nigeria to participate in the Contributory Pension Scheme. Non-compliance can lead to penalties and legal repercussions.
✅ Employee Welfare: Participation in the CPS ensures that employees have a structured savings plan for their retirement, promoting their financial security and well-being in their post-work years.
✅ Attracting and Retaining Talent: Offering a robust pension scheme can make your organization more attractive to potential employees and contribute to higher employee retention rates.
✅ Social Responsibility: Contributing to the pension scheme aligns with principles of social responsibility and demonstrates your organization’s commitment to the long-term security of its workforce.
✅ Tax Benefits: Contributions made by employers to the pension scheme are often tax-deductible, providing a potential financial benefit to the organization.
WHAT YOU GET
Upon successful registration and compliance with PENCOM regulations, your organization will be recognized as a participating employer in the Contributory Pension Scheme. While there isn’t a specific “certificate of registration” issued to employers, your compliance is evidenced by:
✅ Recognition as a Contributing Employer: Your organization will be officially recognized by PENCOM as fulfilling its obligations under the Pension Reform Act.
✅ Employee Pension Accounts: Your employees will have individual Retirement Savings Accounts (RSAs) managed by licensed Pension Fund Administrators (PFAs).
✅ Compliance with Legal Requirements: You will be meeting your statutory obligations regarding employee pensions.
AIM AND OBJECTIVES FOR PENCOM REGISTRATION AND COMPLIANCE
Aim: To fulfill the legal requirements of the Pension Reform Act 2014 and ensure the provision of a sustainable retirement savings scheme for employees.
Objectives:
✅ To comply with the mandatory provisions of the Contributory Pension Scheme as stipulated by PENCOM.
✅ To facilitate the establishment and funding of Retirement Savings Accounts (RSAs) for all eligible employees.
✅ To ensure the remittance of pension contributions in a timely and accurate manner.
✅ To secure the future financial well-being of employees upon retirement.
✅ To maintain a legally compliant and socially responsible business operation.
FAQS
What is PENCOM?
✅ PENCOM (National Pension Commission) is the regulatory body in Nigeria responsible for overseeing and regulating the Contributory Pension Scheme (CPS) in accordance with the Pension Reform Act of 2014.
Who is required to participate in the Contributory Pension Scheme?
✅ Generally, all employers in Nigeria with 15 or more employees are mandated to participate in the CPS. However, even organizations with fewer than 15 employees can voluntarily join the scheme.
How are pension contributions made?
✅ Pension contributions are deducted directly from employees’ salaries (8%) and contributed by the employer (10%) on a monthly basis. These funds are then remitted to the employees’ respective Retirement Savings Accounts (RSAs) managed by licensed Pension Fund Administrators (PFAs).
What is a Retirement Savings Account (RSA)?
✅ A Retirement Savings Account (RSA) is an individual account opened by an employee with a Pension Fund Administrator (PFA). All pension contributions are deposited into this account, and the funds are invested to generate returns for the employee’s retirement.
What is a Pension Fund Administrator (PFA)?
✅ A Pension Fund Administrator (PFA) is a company licensed by PENCOM to manage and invest pension funds contributed under the Contributory Pension Scheme on behalf of employees. Employees have the right to choose their preferred PFA.
COSTS
REGISTRATION COST: FREE
The primary cost associated with PENCOM compliance is the mandatory monthly pension contributions (-% by the employer and -% by the employee) and the cost of procuring a Group Life Insurance Policy for your staff.
For further clarification or specific inquiries,
please visit our official WhatsApp Channel:
https://whatsapp.com/channel/0029Vb3313w2JSDoq2Z
TIMELINE
The initial registration process with PENCOM is generally straightforward once all required documentation is accurately prepared and submitted. The timeline for this initial registration can vary but is typically within a few weeks upon complete submission. However, ongoing compliance involves monthly remittances of pension contributions and annual renewal of the Group Life Insurance Policy.
FOR MORE INFORMATION, PLEASE CONTACT US ON:
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