By Taiye Olayemi
Mr Ivo Takor, a legal expert, has advised retirees under the Contributory Pension Scheme (CPS) to carefully evaluate their options under Section 7(1) of the Pension Reform Act 2014.
Takor, Vice President of the Human Rights Committee, Nigerian Bar Association (NBA), Epe Branch, gave the advice while speaking with the News Agency of Nigeria (NAN) in Lagos on Thursday.
He said the decision between programmed withdrawal and annuity for life carried significant financial and legal consequences.
Speaking on the framework of the law, Takor said the choice affects income stability, risk exposure, estate planning, and contractual obligations.
He said that Section 7(1) provided that a holder of a Retirement Savings Account (RSA), upon retirement or reaching the age of 50 years, had options for accessing their funds.
He explained that the retiree might either choose a programmed withdrawal, administered by a Pension Fund Administrator (PFA), or purchase an annuity for life from a life insurance company licensed by the National Insurance Commission (NAICOM).
“Retirees may also take a lump sum, provided that the residual balance supports withdrawals or an annuity yielding at least 50 per cent of their last annual salary.
“This provision is mandatory in character. It prohibits total withdrawal of retirement savings and is clearly designed to ensure income security in retirement,” he said.
According to Takor, under Programmed Withdrawal, retirees maintain control of their RSA funds with continued investment under regulatory guidelines.
He said periodic payments were based on actuarial life expectancy and projected returns, and the PFA holds fiduciary responsibility for fund management.
He , however, said that retirees remained exposed to market-linked risks, and payment levels might fluctuate depending on fund performance.
Conversely, Takor said an annuity for life involved transferring RSA funds to a licensed insurer, creating a contractual obligation guaranteeing lifetime periodic payments.
He explained that once purchased, the transaction was generally irrevocable, and the retiree relinquishes investment control while the insurer assumed longevity risk.
The legal expert highlighted the statutory 50 per cent minimum pension safeguard, emphasing that it prevented premature depletion of retirement savings, ensured income continuity, and promoted financial sustainability in old age.
Takor advised that retirees seeking predictability and protection from market volatility might prefer an annuity, while those willing to participate in regulated investments with potential fluctuations might opt for programmed withdrawal.
According to him, the law does not favour either option but preserves retirees’ right to make an informed election.
“Retirement benefits represent deferred earnings accumulated over decades of service.
“The choice under Section 7(1) should be made deliberately, knowledgeably, and with full appreciation of its legal implications,” Takor said.
He urged retirees to review annuity contracts carefully, request detailed benefit projections from PFAs, and seek independent financial and legal consultation before finalising their decisions.
“It must be emphasised that the Pension Reform Act 2014 does not prioritise one option over the other. The legislature deliberately preserved choice within a regulated structure.
“As a matter of prudent legal advice, retirees should carefully review the terms of any annuity contract before execution,” he advised.(NAN)(www.nannews.ng)
Edited by Kevin Okunzuwa
