The Pension Reform act 2014 makes available two broad alternatives when accessing your retirement savings. Please see below the main features of the Programmed Withdrawal and Annuity; the two options to consider when accessing your retirement savings.
|Programmed withdrawal is a product offered to Retirees by Pension Fund Administrators (PFAs). In addition to a calculated lump sum, it provides Retiree a guaranteed income on a monthly or quarterly basis over an expected life span||Annuity Plan is an income replacement product offered to retirees by an Insurance Company. Annuity is a series of payments made to person for life following purchase of the plan. (usually with the proceeds of that person’s Retirement Savings Account under the Pension Reform Act (2014)|
|A retiree may move to Retiree Life Annuity at anytime||Once a Retiree transfers his pensions account to Life Annuity, he/she cannot move back to Programmed Withdrawal. However, he/she can move to another insurance company with the residual value only after two years|
|Retirement benefits is in individual RSA||Retirement benefits is in a pool of annuity fund (belongs to all members on Annuity).|
|The profit on investment is credited into the Retiree’s RSA||Profit on investment is for the insurance company|
|Retiree monthly pension can be reviewed upward based on growth recorded in the RSA from time to time.||There is no increment on the payment assured for life.|
|Retiree receives quarterly RSA statement||Retiree does not receive any RSA statement|
|There is provision of Special Reserves to forestall any shortfall in Retiree Fund||There is no such special reserve for annuity payment|
|Upon demise of a Retiree, the RSA balance with accrued interest shall be paid in full to the legal beneficiaries||Annuity is guaranteed for only 10 years. If the Retiree dies after the guarantee period, beneficiaries are not entitled to the deceased balance in the Annuity pool|
Above information can be verified on National Pension Commission’s twitter page: Twitter.com/PencomNig
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