The National Pension Commission (PenCom) has discontinued Death Benefits Account (DBA) for deceased employees under the contributory pension scheme.
According to the notice issued by the regulator, the processing of DBA for claims is going to be discontinued with effect from 1 February 2020. All Pension Fund Administrators (PFAs) have been directed to stop the opening of DBAs effective from 31 January 2020.
Prior to the Pension Reform Act (PRA) 2014, Death Benefits Account (DBA) was used by legal beneficiaries to access the benefits of the deceased employees who did not open RSA during their lifetime. However, pursuant to the above-cited statutory provisions, this practice is no longer valid.
The Pension Reform Act Section 11(1) mandates every single eligible employee to maintain a retirement saving account (RSA) with a PFA of his/her choice. The act also mandates every employer to open a nominal RSA within 6 months of assumption of duty for an employee who fails to open an RSA in accordance with section 11(5) of the PRA 2014. Employers are therefore required to ensure that RSAs are opened for all their employees.
In recent development, which was published on Nairametrics, the regulator called for thorough scrutiny of all cases reported to Pension Fund Administrators about dead Retirement Savings Account holders before making payment to the beneficiaries. This came in the light that some unidentified fraudsters under the disguise of being relatives of workers and retirees under the Contributory Pension Scheme had been approaching the PFAs to collect the pensions of contributors.
[READ MORE: PenCom bars PFAs from collecting bond’s brokerages fee]
Meanwhile, the National Pension Commission was established in 2004 with the following objectives:
- to ensure that every person who worked in either the Public Service of the Federation, Federal Capital Territory or Private Sector receives his retirement benefits as and when due;
- to assist individuals by ensuring that they save to cater for their livelihood during old age and thereby reducing old-age poverty;
- to ensure that pensioners are not subjected to untold suffering due to inefficient and cumbersome process of pension payment;
- to establish a uniform set of rules, regulations and standards for the administration and payments of retirement benefits for the Public Service of the Federation, Federal Capital Territory and the Private Sector; and
- to stem the growth of outstanding pension liabilities.
Download the PenCom notice here.