President Goodluck Jonathan yesterday signed the Pension Reform Bill, 2014 into law.
With the signing the bill into law, the Pension Reform Act, No 2, 2004 has been repealed.
The new law prescribed 10-year jail term for anybody who embezzles pension fund
The bill had been passed by the House of Representatives on May 27, while the Senate passed the bill on June 3.
The new law is designed to punish offenders, with a view to serving as deterrence to those who may want to mis-manage or divert pension funds assets.
The new pension law also provided for the minimum rate of Pension Contribution from 15 per cent to 18 per cent of monthly emolument, and 8 per cent to be contributed by employee and 10 per cent by the employer.
Also outlined in the law, the percentage would ensure the provision of additional benefits to workers’ Retirement Savings Accounts thereby enhance their monthly pension benefits at retirement.
The new law also empowered pension commission to take proactive corrective measures on licenced operators whose situations, actions or inactions jeopardise the safety of pension assets as the provision further fortifies the pension assets against mismanagement and or systemic risks.
The law also provided for the repositioning of the Pension Transition Arrangement Directorate (PTAD) with a view to ensuring efficiency and accountability in the administration of the Defined Benefits Scheme in the federal public service.
It equally provided for the creation of additional permissible investment instruments to accommodate initiatives for national development, such as investment in the real sector, including infrastructure and real estate development.
This is provided without compromising the paramount principle of ensuring the safety of pension fund assets.
Also provided for in the new pension reform law is the expanded coverage of the contributory Pension Scheme (CPS) in the private sector organisations with three employees and above, in line with the drive towards informal sector participation.
It also reduced the waiting period for accessing benefits in the event of loss of job by employees from six months to four months. This is done in order to identify with the yearning of contributors and labour.
The law also makes provision that would compel an employer to open a Temporary Retirement Savings Account (TRSA) on behalf of an employee that failed to open an RSA within three (3) months of assumption of duty. This was not required under 2004 Act.