{"id":241,"date":"2014-08-02T13:43:42","date_gmt":"2014-08-02T13:43:42","guid":{"rendered":"http:\/\/adesanyapartners.com\/blog\/?p=241"},"modified":"2014-08-02T13:46:06","modified_gmt":"2014-08-02T13:46:06","slug":"241","status":"publish","type":"post","link":"https:\/\/adesanyapartners.com\/blog\/241\/","title":{"rendered":"EFFECT OF THE AMMENDED PENSION REFORM ACT 2014 (PRA 2014) AND IT\u2019S EFFECT ON EMPOYER AND EMPLOYEES."},"content":{"rendered":"<p>On July 1, 2014, President Goodluck Jonathan signed into law the New Pension Reform Act 2014 (PRA 2014) after 10 years performance of the old Pension Reform Act of 2004. The new law repeals the 2004 Pension Reform Act No. 2 and prescribes a\u00a010-year jail term for pension thieves.<\/p>\n<p>The Act does not specify a commencement date, however, Section 2 of the Interpretation Act CAP I23 of LFN 2010 stipulates that, where no date of commencement is contained in an Act, the commencement day shall be the day the Act was passed or signed into law. Therefore, the commencement date of the new Pension Act is 1<sup>st<\/sup> July, 2014.<\/p>\n<p>The changes in the old pension Reform Act 2004, was aim to streamline the savings of funds towards retirement and the provision of funds after retirement, including availability of funds for the surviving beneficiaries of deceased employees whilst in service and retirees under the pension scheme within the guaranteed period.<\/p>\n<ul>\n<li>The key highlights and salient point of the new Pension Act are detailed below:Minimum number of staff requirement for employer to take part in pension scheme has been increased to <b>15<\/b> from <b>5<\/b> employees as stipulated under the 2004 Act.<\/li>\n<\/ul>\n<ul>\n<li>Section 8(1) of the New Act exclude\/exempt employees that is 3 years or less to retirement from participating in the pension \u00a0 \u00a0\u00a0 scheme.<\/li>\n<\/ul>\n<ul>\n<li>Minimum contribution from <b>employer<\/b> has been increased from 7.5% to 10%. The minimum level of contribution from <b>employee<\/b> was also increased from 7.5% to 8%. This means the two rate is no longer equal. T<a href=\"http:\/\/adesanyapartners.com\/blog\/wp-content\/uploads\/2014\/08\/New-Pension-Reform-Act-2014.pdf\">New-Pension-Reform-Act-2014<\/a>he greatest impact is the base upon which the monthly contribution is to be calculated. The definition of \u2018monthly emoluments\u2019 has been expanded to mean the total emolument as defined in the employee\u2019s contract of employment provided it is not less than the total of the employee\u2019s basic salary, housing and transport allowance.<\/li>\n<\/ul>\n<ul>\n<li>\u00a0Group life policy\u2019s benefit is now allowed to be paid to a name beneficiary of employee upon his death. In the Old Act (Act 2004), Group life policy\u2019s benefits are paid into a deceased employee\u2019s Retirement Savings Account (RSA) which makes it difficult for beneficiaries to access. Consequently, employers are required to ensure that their employees avail the insurer with the list of their beneficiaries to receive the proceeds of their company\u2019s Group Life Policy under which insurance has been taken out for their lives whilst in service.<\/li>\n<\/ul>\n<ul>\n<li>\u00a0Voluntary contributions that is withdrawn within five years are taxable in the hands of the employee<\/li>\n<\/ul>\n<ul>\n<li>\u00a0The 2014 Act also empowers <b>PenCom<\/b>, subject to the fiat of the Attorney\u00a0General of the Federation, to institute criminal proceedings against\u00a0employers who persistently fail to deduct and\/or remit pension\u00a0contributions of their employees within the stipulated time.<\/li>\n<\/ul>\n<ul>\n<li>\u00a0In the event of loss of jobs (where an employee disengages from employment or is disengaged), the new Act reduces the waiting period\u00a0for accessing benefits from six months to four.<\/li>\n<\/ul>\n<ul>\n<li>\u00a0The Pension Reform Act 2014 makes provision that would compel an\u00a0employer to open a Temporary Retirement Savings Account, TRSA, on\u00a0behalf of an employee that failed to open an RSA within three months\u00a0of assumption of duty.<\/li>\n<\/ul>\n<ul>\n<li><b>\u00a0<\/b>The Act also allows an employer to pay additional payments benefits to employee upon retirement <b>OR<\/b> can elect to take full responsibility of the contribution (that is, bears the total pension contributions of its employees). In that case, the Contribution shall not be less than 20% of the employee\u2019s monthly emolument.<\/li>\n<\/ul>\n<p><b>\u00a0OTHER AREAS MAINTAINED BY THE NEW ACT 2014 AS CONTAINED IN THE OLD ACT 2004<\/b><\/p>\n<ul>\n<li>Employers are required to take up Group Life Insurance policy on behalf of their employees for a minimum of three times the annual total emolument of the employee.<\/li>\n<\/ul>\n<ul>\n<li>Employee is free to utilize the amount on their RSA for either programmed withdrawal or to purchase an annuity from an insurance company.<\/li>\n<\/ul>\n<ul>\n<li>The ACT still allows employer with less than the minimum staff requirement (prescriptive 3 employees) and self-employed persons to participate in the pension scheme under separate guidelines issued by <b>PenCom<\/b>. However, the Act is silent on the applicability of the Scheme to private organizations with more than 3 but less than 15 employees.<\/li>\n<\/ul>\n[plulz_social_like width=\"350\" send=\"false\" font=\"arial\" action=\"like\" layout=\"standard\" faces=\"false\" ]\n\n<div class=\"twitter-share\"><a href=\"https:\/\/twitter.com\/intent\/tweet?via=AdesanyaPartner\" class=\"twitter-share-button\" data-size=\"large\">Tweet<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>On July 1, 2014, President Goodluck Jonathan signed into law the New Pension Reform Act 2014 (PRA 2014) after 10 years performance of the old Pension Reform Act of 2004. The new law repeals the 2004 Pension Reform Act No. &hellip; <a href=\"https:\/\/adesanyapartners.com\/blog\/241\/\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":242,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[9,15,14,5],"tags":[59,57,58,60],"_links":{"self":[{"href":"https:\/\/adesanyapartners.com\/blog\/wp-json\/wp\/v2\/posts\/241"}],"collection":[{"href":"https:\/\/adesanyapartners.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/adesanyapartners.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/adesanyapartners.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/adesanyapartners.com\/blog\/wp-json\/wp\/v2\/comments?post=241"}],"version-history":[{"count":3,"href":"https:\/\/adesanyapartners.com\/blog\/wp-json\/wp\/v2\/posts\/241\/revisions"}],"predecessor-version":[{"id":246,"href":"https:\/\/adesanyapartners.com\/blog\/wp-json\/wp\/v2\/posts\/241\/revisions\/246"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/adesanyapartners.com\/blog\/wp-json\/wp\/v2\/media\/242"}],"wp:attachment":[{"href":"https:\/\/adesanyapartners.com\/blog\/wp-json\/wp\/v2\/media?parent=241"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/adesanyapartners.com\/blog\/wp-json\/wp\/v2\/categories?post=241"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/adesanyapartners.com\/blog\/wp-json\/wp\/v2\/tags?post=241"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}