Contributory Pension Scheme (CPS) Retirement Pack


In line with the provisions of Section 7(1) of the Pension Reform Act (PRA) 2014, retirees are given two retirement benefit modes, which are Programmed Withdrawal (PW) and Retiree Life Annuity (RLA). Consequently, a retiree is required to choose between the two modes by which his/her retirement benefits shall be paid.

This Retiree Pack is a guide to help prospective retirees make informed decision. Retirees are advised to carefully go through this Pack with the view to making informed decision on the mode of receiving their retirement benefits under the Contributory Pension System (CPS).

The Retiree Pack addresses the frequently asked questions in relation to PW and RLA while providing the list of things to be done by a prospective retiree. It also specifies the features of PW and RLA.

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Contributory Pension Scheme (CPS) Retirement Pack

Frequently Asked Questions

This is a stream of income paid by a Pension Fund Administrator to a retiree on monthly or quarterly basis determined using a Programmed Withdrawal Template over an expected life time.

The RSA balance is being re-invested by the PFA to generate more income/funds for the retiree. When a retiree dies, any balance in the RSA will be paid to the named beneficiary(ies).

This is a stream of income purchased from a life insurance company with the available RSA balance under the CPS as premium. It provides a guaranteed periodic income (pension) to a retiree throughout his/her life after retirement. Annuity is guaranteed for ten years. If the retiree dies within the first ten years of retirement, the monthly annuity will be paid to his beneficiary(ies) for the remaining years up to ten years at a present value.

A retiree can buy annuity by remitting his/her available RSA balance as premium to a Retiree Life Annuity Provider (Life Insurance Company) with the commitment to provide the monthly/quarterly annuity payments for life.

The Regulations on RLA are jointly issued by the National Pension Commission (PenCom) and the National Insurance Commission (NAICOM).

A retiree on PW can change to RLA. This can be done after at least 1 year of being on PW.

A retiree can request the PFA to transfer his RSA balance to his chosen Retiree Life Annuity Provider (RLA Provider), given the PFA one month notice.

A retiree on RLA cannot change to PW. This is because RLA is for life.

Section 13 of the Pension Reform Act (P RA) 2014 states that a holder of a retirement savings account may not more than once in a year, transfer his account from one PFA to another.

A retiree on RLA can change his RLA Provider after at least two years of being with the current RLA Provider with the approval of NAICOM.

A retiree whose RSA balance is exhausted may be eligible for the payment of Guaranteed Minimum Pension (GMP) through the implementation of the Minimum Pension Guarantee (MPG).

MPG is an arrangement to provide Guaranteed Minimum Pension to eligible retirees.

The risk having been transferred to the RLA provider, RLA cannot be exhausted.

Guaranteed Minimum Pension is the lowest benchmark of pension which an eligible retiree under the CPS should receive as minimum pension.

A retiree on PW is expected to take his/her complaint to the PFA for resolution. However, where the retiree is not satisfied with the response of the PFA, he/she can seek the intervention of PenCom.

A retiree on RLA is expected to take his complaint to the RLA Provider for resolution. However, where the retiree is not satisfied with the response of the RLA Provider, he/she can seek the intervention of NAICOM.

The RSA balance at retirement is made up of the following:

  1. Pension Contributions from July 2004 till the date of retirement;
  2. Accrued right (if any), representing pension and gratuity for services rendered from date of first appointment to 30 June, 2004;
  3. Investment income generated by the PFA;
  4. Voluntary contributions (if any);
  5. Micro pension contributions (if any); and
  6. Nigeria Social Insurance Trust Fund (NSITF) (if any)

At retirement, the balance in the RSA of a retiree, after the payment of lumpsum and pension arrears (if any), is used to procure an annuity for life of the retiree or a programmed withdrawal over the expected life span of the retiree.

There is no fixed percentage for lumpsum payable to a retiree. Lumpsum is determined using the RSA balance, age, gender and final salary of the individual retiree. However, the retiree can choose between a zero lumpsum and a maximum lumpsum calculated using the PW template before the purchase of either PW or RLA.

There is an inverse relationship between the amount paid out as Lumpsum and periodic benefit payout. Where a retiree receives a maximum allowable lumpsum, he shall be entitled to the minimum monthly/quarterly pension and vice versa.

The higher the lumpsum received the lower the available RSA balance for the premium, therefore lower monthly/quarterly annuity and vice versa.

Periodic pension (Monthly or quarterly pension) is determined using the following individual retiree's data:

  1. Age at Retirement
  2. Gender
  3. RSA Balance
  4. Annual Total Emolument (ATE)
  5. Retiree's choices

Only retirees with RSA balance of N550,OOO.OO and below are allowed to withdraw their RSA balance at once subject to PenCom's review from time to time.

Pension fund asset cannot be applied for loans or credits or as a collateral for any loan taken by the holder of the RSA.

The balance in the RSA can be accessed at retirement or on attaining the age of 50 (whichever is later), at death of the RSA holder or at disengagement from employment before the age of 50 years. Where the RSA holder is less than 50 years of age he can withdraw 25% of his RSA balance after 4 months of job loss.

Role of A Retiree

The following actions are to be undertaken by a prospective retiree in order to facilitate the process of payment of his/her retirement benefits:

Features of Programmed Withdrawal and Retiree Life Annuity

# Programmed Withdrawal Retiree Life Annuity
1 A product offered and administered by Pension Fund Administrators (PFAs) A product offered and administered by Life Insurance Companies (Retiree Life Annuity Providers)
2 Regulated by the National Pension Commission (PenCom) Regulated by the National Insurance Commission (NAICOM)
3 Pays monthly/quarterly pension over an expected life span as determined using the A(55) Tables of Annuitants Ultimate rates published by the Institute and Faculty of Actuaries of United Kingdom (as amended). Pays monthly/quarterly Annuity for life as determined using usually the PA (90) Tables of Annuitants Ultimate rates published by the Institute and Faculty of Actuaries of United Kingdom (as amended).
4 The balance in the RSA is re-invested by the PFA to generate income/funds for the retiree. The profit/loss on investment is credited into the retirees RSA. The premium is transferred to a Retiree Life Annuity Pool and invested to generate income to the pool.
5 Retiree may benefit from periodic pension enhancement resulting from returns on investment of the pension funds in their RSAs. Periodic pension enhancement may be applicable depending on type of RLA purchased.
6 Balance of retirement benefits remain in the retiree's RSA and RSA statement of account is issued to retirees quarterly or on request. Retiree receives monthly/quarterly annuity as long as he/she is alive.
7 Retirees may move to Retiree Life Annuity after one year of being under Programmed Withdrawal. A retiree on RLA cannot move to programmed withdrawal but may change to another RLA provider after at least two years with existing RLA provider.
8 In case of death of a retiree, the legal beneficiary(ies) will be paid the total RSA balance. In the case of death of an annuitant, RLA is guaranteed for at least ten years. On demise of the annuitant within the guaranteed period, the RLA provider would pay enbloc the sum of annuity for the remaining guaranteed years, at a present value to the named beneficiary(ies).
9 The RSA balance under programmed withdrawal can be exhausted and resort be made to MPG. RLA are not exhaustible, provided the retiree is still alive.
10 Retiree and PFA share risk. Risks are transferred to the RLA provider.


All enquiries regarding these guidelines shall be directed to the National Insurance Commission and/or National Pension Commission.

The Commissioner for Insurance
National Insurance Commission
Plot 1239 Ladoke Akintola Boulevard Garki 2, Abuja, Nigeria

The Director General
National Pension Commission
174 Adetokunbo Ademola Crescent Wuse II, Abuja, Nigeria