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FAQs

Frequently Asked Questions

Find answers to all your queries about our service.

  • Who is a trustee?

    A trustee means an individual or a company appointed to carry out the purposes of a trust in accordance with the provisions of the trust instrument and general principles of trust law.
    Occupational pension schemes, provident fund schemes, personal pension schemes and other privately managed pension schemes shall only be managed by trustees licensed and approved by NPRA.

  • What are the three tier pension scheme ?

    In 2008 an act was passed by parliament in response to the public agitation to ensure the creation of a sustainable unified pension structure for all workers in the country. The act established a contributory scheme consisting of the following tiers
    Tier 1: A mandatory basic national social security scheme

    Tier 2: A mandatory fully funded and privately managed occupational scheme

    Tier 3: A voluntary fully funded and privately managed provident fund and personal pension scheme.

  • What are the benefits of the three tier pension scheme?

    Tax relief: The law allows up to 35% of an employee’s income to be treated as deductible income if set aside for as contributions to pension funds. In other words the towards retirement 13.5% contributed to Tier, 5% to tier 2 and up to 16.5% to tier of your basic salary is treated as tax exempt. This far outweighs any investment vehicle in first years of investment.

    Transparency: One of the key elements of the reforms is to give employees greater transparency and accountability with regards to their pension.

    Security: The main objective of the three-tier pension scheme is to provide for pension benefits that will ensure retirement income security for workers.

  • Can an employee ever lose his/her contribution as a result of poor investment decision?

    The three tier pension scheme is heavily regulated by the national pension regulatory authority. They have designed investment guidelines which are meant to provide a high level of security to pension funds.

    Nonetheless approved trustees have the fiducial responsibility to ensure that they strictly follow the guidelines and investment best practices to ensure the preservation of capital.

  • What happens if i leave my current employer?

    Tier 2 benefits: When an employee changes employment, the law provides for the employee to elect to transfer his/her accrued benefits to another scheme in accordance with the regulations of that scheme. The approved trustees of the respective schemes shall comply with requirements with respect to the transfer of the benefits.

    Tier 3 benefits: Subject to the vesting rules of the scheme the employee may forfeit part or the total amount of the employer’s contribution if the worker leaves the employment of the employer before the end of the vesting period. An employee who satisfies the vesting requirements may elect to receive his accrued benefits subject to a tax clawback of 15% before ten years or transfer it to a personal pension scheme.

  • What is the minimum age for withdrawing funds from my pension trust?

    The minimum age for pension fund withdrawals typically aligns with the legal retirement age in your country, which is often around 60 to 65. However, some plans may offer early withdrawals or partial distributions under specific circumstances.

  • Can I change my pension contribution amount?

    In many pension trusts, you can adjust your contribution amount within certain limits. It's advisable to consult with your pension trust administrator or employer to understand the flexibility and options available.

  • How are taxes handled when I receive pension payments?

    The tax treatment of pension payments can vary based on your jurisdiction and the type of pension trust. Generally, taxes are applied when you withdraw funds. It's recommended to consult a tax advisor for guidance on your specific situation.

  • What happens to my pension trust if I change jobs?

    You typically have several options, including leaving your pension funds with your previous employer, transferring them to a new employer's plan, or rolling them into a personal retirement account. Understanding the implications of each choice is important in making an informed decision.