The Contributory Pension Scheme, CPS, which commenced in July 2004, seeks to, amongst others, ensure that every worker receives his retirement benefits as and when due.
Features of the CPS Contributory in nature:
The CPS is contributory in nature. This means that the employer will contribute 10 percent, while the employee will contribute 8 percent to make up the 18 percent minimum monthly contribution. An employer may however elect to contribute the entire 18 percent on behalf of its employees. In addition, voluntary contributions are allowed.
Mandatory in nature:
The CPS is mandatory for employees of the Federal Government, the Federal Capital Territory (FCT) and private sector organizations with three or more employees.
From onset fund is set aside to fully meet future retirement benefits of contributors.
Individual Retirement Savings Account (RSAs): Personalized and portable with the aid of Personal Identification Number, PIN.
The CPS is strictly regulated and supervised by National Pension Commission, PenCom and is private sector driven.
Separation of functions:
There is separation of functions of the Pension Fund Administrators, PFAs, and Pension Fund Custodians, PFCs. PFAs administer the funds while PFCs hold pension funds in the names of the contributors.
Contributions are remitted into individual Retirement Savings Account (RSA) and fully funded.