Pension Insight: How expatriates, Nigerians working abroad can participate in CPS

Due to increased global work mobility, many Nigerians are now working abroad. In the same vein, Nigeria attracts expatriates from various parts of the world.

In some cases, Nigerians who move abroad for work are already enrolled in the contributory pension scheme (CPS) and may wish to continue saving in Nigeria for their retirement.

Similarly, foreigners working in Nigeria may be members of various pension plans in their home countries and desire to participate in the CPS while working in Nigeria.

Recognising these needs, the National Pension Commission (PenCom) issued guidelines for cross-border arrangements under the Pension Reform Act (PRA) to facilitate the participation of the above categories of workers in the CPS.

The PRA 2014 primarily applies to Nigerian citizens working in Nigeria. However, Nigerians working abroad are allowed and encouraged to participate in the scheme voluntarily.

Also, while the scheme is not mandatory for expatriate employees in Nigeria, such employees can elect to participate by making voluntary contributions under the CPS.

The CPS covers Nigerians working in Nigerian missions abroad if these workers are employees of Nigerian institutions required to implement the CPS under the PRA 2014, as in the case of career diplomats routinely posted to missions abroad.

However, where the Nigerian missions employ Nigerians as local temporary support staff in the respective host countries in line with their domestic laws, the PRA 2014 does not apply to these workers.

A Nigerian previously working abroad can be part of the CPS if he secures formal employment in Nigeria upon return. Where the returnee is not employed, the person may make voluntary contributions under the scheme. A person who resigns from an organisation operating in Nigeria and takes up an appointment with an organisation outside Nigeria can make arrangements with the new employer to continue remitting his pension contributions to his RSA in Nigeria.

If such an employee chooses to discontinue contribution under the scheme in Nigeria or where the new employer has an entirely different pension arrangement, he can access his RSA upon retirement or attaining the age of 50 years, whichever is later.

Notably, the CPS aims to provide financial security for employees in their retirement years. The CPS requires both employees and employers to contribute at least 18 percent of the employee’s monthly salary into a retirement savings account (RSA). This account serves as a pool of funds that grows over time, ensuring a stable income for individuals during their retirement.

Nigerians working abroad can initiate the process by contacting a pension fund administrator (PFA) through their website or by visiting its offices for necessary information and guidance to facilitate enrolment in the CPS. The PFA will guide them through the account opening process, ensuring the required documents are submitted.

Where a Nigerian working abroad has joined a retirement benefits scheme abroad, the person can repatriate the accumulated benefits to his RSA with a PFA in Nigeria, where the offshore pension regulator’s legislation permits such transfers. The repatriation of earned benefits must comply with the relevant exchange rate and money laundering rules.

A Nigerian already contributing to an RSA that is going on transfer abroad or changing employment for another employment abroad should notify his PFA and request the PFA to freeze his RSA until he returns to continue his contributions. The employee shall indicate whether he intends to send voluntary contributions to the RSA.

For expatriates working in Nigeria, the process is relatively similar. Any foreign employee in Nigeria is allowed to join the CPS, irrespective of a pension arrangement in his home country. The employee shall inform his employer of his interest in joining the Scheme and open an RSA with a PFA of his choice. Where the employee’s wage is paid in foreign currency, the employer shall convert the contribution to the Naira equivalent and remit it to the Pension Fund Custodian (PFC). In the event of permanent relocation, the expatriate shall give the PFA three months’ prior notice before exiting from the Scheme.

In conclusion, by extending the reach of the CPS to Nigerians working abroad and expatriates in Nigeria, the government aims to ensure that these individuals can secure their financial future and enjoy a comfortable retirement. It is essential for all parties involved to comply with the guidelines set forth by PenCom towards a seamless process.