Most often, these contributors keep asking: “When can I get my money in the RSA? How safe is this scheme? And what is the mode of payment after retirement? Questions like these and many more always keep popping up.
Mr.
Usman Suleiman, the
Managing Director/CEO of Future Unity
Glanvills Pensions Ltd, is of the view that “everybody
working will be expected to have a saving for his or her retirement. We
therefore advise that everyone should have a retirement account no matter the
sector one is working in.”
He is only echoing one of
the provisions of the Act that sets up the scheme, which states: “Every eligible employee (private or public) shall maintain a
Retirement Savings Account in his name with the Pension Fund Administrator
(PFA) of his choice. The employee shall notify his employer of the PFA chosen and
the identity of the Retirement Savings Account (RSA) opened.
“The employee and
employer contribute a minimum statutory percentage (usually 7.5 per cent) of
the employee’s monthly emoluments (comprising basic salary, housing allowance
and transport allowance with others depending on grade level and employment
service structure type) into the Retirement Savings Account of the employee.
The contributions would be managed and administered by Professional Fund
Administrators and held in custody by licensed Pension Fund Custodians. At
retirement, the amount in the employee’s Retirement Savings Account would be
the total contributions plus income and capital gain earned on the
contributions made.”
Can a contributor withdraw
money from the RSA before retirement? Suleiman explains: “In terms of having to service employees who are out of job
and will have to sustain themselves, the law has provided that in the event of
the loss of job and inability to get another job for a period of four months
and above, a client can apply to access 25 per cent of the balance in his
account. This means that only 75 per cent will remain to be invested.” The
implication of this is that after the 25 per cent has been withdrawn from your
RSA, the balance cannot be touched until retirement. “If the employee, however,
fails to get another job up till 50 years, he will come back as a retiree
to fully access that account at lump sum as pension.”
However, IEI Anchor Pension Managers Limited
states in its website that, “if you choose to make
additional voluntary contributions (AVC) into your RSA, you are entitled to
withdraw from your AVC any time before retirement (it is tax free if withdrawal
is after five years). So if you’ve been putting some AVC in your retirement
account or if you start now, you too can withdraw from that at any point before
you retire.”
The company also provides
answers to other frequently asked questions: What happens to your balance after
you withdraw your lump sum? When you retire and take an initial lump sum from
your RSA, the rest of the money will either be used to procure an annuity for
you or it will be used to fund a programmed withdrawal that pays you for an
estimated lifespan of not less than 18 year in real terms for life.
A programmed withdrawal is
a method by which the employee collects his retirement benefits in periodic
sums spread throughout the length of an estimated life span. An annuity is an
income purchased from an approved life insurance company, which provides
monthly or quarterly income to the retiree during his/her lifetime but only the
first 10 years are guaranteed, meaning if the retiree dies after 10 years,
his/her beneficiaries get nothing.
Other than when you retire,
when can you have access to your RSA? There are special cases. For instance, if
you retire before you’re 50 years old because of a mental or physical
disability, your PFA will give you immediate access to your RSA. You can also
claim 25 per cent of your pensions if you lose your job and can’t get a new one
within four months. (Sun)
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