The National Pension Commission (PenCom) has disbursed N274.34 billion in death benefits to the dependents of deceased pension contributors between 2020 and September 2024. According to the latest data from PenCom, the funds were allocated to 45,976 beneficiaries within the period.
Under the provisions of the Pension Reform Act, pension contributors who pass away while in service are entitled to benefits from their group life insurance policy, maintained by their employer, in addition to the balance in their Retirement Savings Account (RSA), which is managed by a Pension Fund Administrator (PFA).
According to Agudah Oguche, Chief Executive Officer of the Pension Fund Operators Association of Nigeria (PenOp), the increase in death benefit payments reflects both the rising number of beneficiaries and a strong commitment to providing financial support to families of deceased contributors.
The Contributory Pension Scheme (CPS), introduced under the Pension Reform Act of 2004 and revised in 2014, ensures that pension contributors are protected both during their lifetime and after death. This system guarantees that as long as contributions are consistently made through an employer, financial security is assured in the event of a contributor’s passing.
Section 1, Part 3 of the Pension Reform Act 2014 states that when an employee dies, entitlements under the life insurance policy (as mandated by Section 4(5) of the Act) must be paid to the named beneficiary by the underwriter, in accordance with Section 57 of the Insurance Act.
While the pension scheme ensures financial support for beneficiaries, claiming death benefits can be a complex process, especially in cases where the deceased passed away intestate (without a valid will). This often leads to legal and administrative hurdles for the family.
To stop this challenge, contributors are strongly encouraged to prepare a will to clearly outline how their assets should be distributed in the event of their passing. Chika Onwunali, Managing Partner at Premium Debate, emphasizes that estate planning through a will is the most practical approach to ensuring the smooth transfer of pension benefits and other assets.
A will is a legally binding document where an individual (the testator) designates specific individuals or entities as beneficiaries of their property upon their death. Proper estate planning can prevent prolonged legal disputes and ensure that dependents receive their entitled benefits without unnecessary delays.
In cases where an employee is declared missing and remains unaccounted for after one year, PenCom establishes a Board of Inquiry to determine whether the person can be presumed dead. If the board concludes that death is the most reasonable presumption, the provisions for death benefits under the Pension Reform Act are applied, and the beneficiaries can proceed with claims.
By implementing these structured policies, Nigeria’s pension system continues to provide financial security for contributors and their families, reinforcing its role in national economic stability.
