The Contributory Pension Scheme was established to provide regular monthly stipends for Nigerian workers in retirement.

Employers and workers are mandated to contribute 10 per cent and eight per cent of the workers’ monthly emoluments into their Retirement Savings Accounts with the Pension Fund Administrators.

However, peculiar conditions may necessitate a worker to access part of the savings before he/she retires.

According to the Pension Reform Act 2014, a worker can access 25 per cent of the savings in his RSA, if he loses his job and does not get another after four months.

The retiree can also access part of the funds for mortgage scheme, to enable him be become a house owner.

The informal sector workers under the Micro Pension Plan can also access part of their savings based of the regulatory guidelines.

Section 2(3) of the Pension Reform Act, 2014 provides that employees of organisations with less than three employees as well as the self-employed persons will be entitled to participate in the CPS.

These categories of persons mainly in the informal sector constitute the vast majority of the working population in Nigeria and are not covered by any retirement benefit scheme.

The informal sector contributors under the MPP are allowed to withdraw at least 40 per cent of the contributions in their RSAs according to the National Pension Commission.

This is, however, different from what is obtainable with the formal sector in which contributors can only access 25 per cent of their RSA balance after four months of being out of paid employment or at retirement.

However, the CPS was opened to the informal sector in March 2019, as part of the financial inclusion objectives of the Federal Government.

However, to start withdrawing the 40 per cent contribution, the artisan must have contributed to his RSA for a minimum of three months.

The Director-General, PenCom, Mrs Aisha Dahir-Umar, says that the micro pension plan targets the significant majority of Nigeria’s working population who, incidentally, operate in the informal sector.

She says, “A prospective micro pension contributor is required to open a Retirement Savings Account by completing a physical or electronic registration form with a Pension Funds Administrator of his/her choice. The contributors may make contributions daily, weekly, monthly or as may be convenient to them.”

She adds, “Every contribution shall be split into two, comprising 40 per cent for contingent withdrawal and 60 per cent for retirement benefits. The contributor may, based on his/her needs, periodically withdraw the total or part of the balance of the contingent portion of his/her RSA, including all accrued investment income thereto.

“The contributor may also choose to convert the contingent portion of the contributions to the retirement benefits portion. The remaining balance in the RSA shall be available to the contributor upon retirement or attaining the age of 50 years.”

According to PenCom, no fewer than 443,720 contributors have withdrawn N182.19bn from the CPS since inception of the scheme till the end of December 2022.

The pension industry regulator states that temporary loss of employment or disengagement will be where an employee voluntarily retires, disengages or is disengaged before attaining the age of 50 years and is unable to secure another employment after four months of the disengagement.

To access 25 per cent for temporary loss of employment, PenCom states in its revised regulation on the administration of retirement and terminal benefits that the individual should present some documents.

They are, “Letter of acceptance of resignation or disengagement issued by the employer; Where the employer fails/refuses to accept the resignation letter from the employee, the PFA shall write the employer confirming the employee’s resignation and ensure that an acknowledgement copy is kept as proof of receipt; Where the employer fails to respond to the PFA’s inquiry in (b) above within 30 days, the employer’s refusal is taken as acceptance of the employee’s resignation for the purpose of benefits payment.”

A formal request for withdrawal of 25 per cent of RSA balance and any other relevant document as may be specified by the PenCom will also be required.