The National Pension Commission (PenCom), which is the body empowered to regulate and oversee pension-related matters, recently issued a public notice (the Notice); wherein it mandated all licensed Pension Fund Administrators (PFAs) to discontinue the operation of Death Benefits Accounts (DBAs) with effect from 31 January 2020. DBAs have been used by legal beneficiaries to access benefits of deceased contributors to the pension scheme who did not open Retirement Savings Account (RSA) during their lifetime.
Further, the Notice states that death benefits claims will no longer be processed through DBAs effective 1 February 2020. Therefore, employers of labour are required to open an RSA within six months of assumption of duty for any employee who fails to open an RSA, in line with the provisions of section 11(5) of the Pension Reform Act (PRA), 2014.
With the issuance of the Notice, PenCom is reiterating that the use of DBAs to access the benefits of deceased contributors is not valid and would no longer be tolerated. Thus, employees are required to ensure that they register with a PFA of their choice in accordance with the stated timelines issued by PenCom.