The death of a pension contributor under Nigeria’s Contributory Pension Scheme (CPS) does not mean the end of their hard-earned savings, according to experts. The CPS, established under the Pension Reform Act of 2004 and amended in 2014, is a mandatory scheme for employees in public and private organizations with three or more staff members.

How the Scheme Works
Under the CPS, both employers and employees contribute to a Retirement Savings Account (RSA) managed by Pension Fund Administrators (PFAs) and regulated by the National Pension Commission (PenCom). The RSA accumulates contributions and investment returns, which are eventually paid out as pension benefits.

Death Before Retirement
If a contributor dies before retirement, the total RSA balance, including accrued investment income, is paid to their designated beneficiaries, not automatically to the Next of Kin. Upon opening an RSA, contributors are required to nominate beneficiaries using forms provided by their PFA.

Beneficiaries must submit relevant documentation to claim the funds, including:

• Death certificate of the contributor
• Letter of Administration (if no Will exists)
• Valid identification
• Bank account details
• Proof of relationship to the deceased

In cases where multiple claimants emerge or nominations are unclear, PFAs may require a Letter of Administration from a probate court to establish legal entitlement.

Death After Retirement
For contributors who die after retirement, how benefits are handled depends on the type of pension payment chosen:

• Programmed Withdrawal: Monthly payments continue until the RSA is depleted. Any remaining balance is paid to the beneficiaries.
• Retirement Annuity: If the retiree opted for an annuity with a guaranteed period, payments for the remainder of the term are passed to beneficiaries or the estate.

Where there is no clear nomination, pension benefits are subject to Nigerian inheritance laws, and only legal beneficiaries recognized by the court can receive the funds.

Taxation and Deductions
Pension benefits are generally tax-exempt. However, any outstanding debts owed to the employer may be deducted from the RSA before payment to beneficiaries.

Role of PFAs and PenCom
PFAs are responsible for managing RSAs, verifying beneficiaries, and releasing funds, while PenCom oversees regulatory compliance and can intervene in cases of dispute or delay.

Advice for Families
Experts advise contributors to keep their beneficiary nominations updated, inform family members of their pension arrangements, and maintain easy access to RSA statements and other key documents. Prompt engagement with PFAs can help families avoid unnecessary delays in accessing funds.

Oguche Agudah, CEO of the Pension Fund Operators Association of Nigeria (PenOp), emphasized that following proper procedures ensures pension savings are protected and passed on to loved ones, providing financial security even in the event of death.