Pension for Contract Staff? Here's Everything You Must Know
Running a business means that sometimes you might need to hire contract workers to handle specific projects that have a shorter time span than your regular work projects. And to do this successfully, it is important to know the appropriate compensation and benefits package for them. This will enable you to draw up a valid legally binding agreement.
While contract staff typically do not have the same arrangements as permanent staff such as flexibility and provision of work equipment, they are entitled to adequate compensation.
What does the law say about providing pensions for contractual workers? Here, you will learn everything about this.
Are you working as a contract worker and need to know if you are entitled to receive pension from your employer? This piece of article will also help to clear your doubts and clarify this area of concern for you.
First, there are different types of workers. As an entrepreneur, it is important to know that you can have full-time, part-time, temporary or contractual employees depending on your budget, urgency of work projects and size of business. Usually, startups and small businesses are encouraged to start by hiring part-time or contract workers as their budgets are too limited to cover the cost of hiring full-time workers in their bootstrapping stage.
You’ve made the decision to work with a professional whose capability of meeting your business goals has been tested and the contract letter seems ready to be sent out, but you need to be sure that you did not prepare a compromising document which can lead to future legal cases. Here is what the law says about pensions for your contract staff:
“No Contract Staff in Pension Law,” Says PenCom
According to the National Pension Commission (PenCom), the new Contributory Pension Scheme (CPS) does not discriminate against workers engaged to work on a contractual basis. This means that all workers — including contract staff — are entitled to own a Retirement Savings Account (RSA) where their pension contributions are deposited monthly by their employer.
READ MORE HERE: 4 Things All Salary Earners Must Know About Contributory Pension Scheme (CPS) in 2022
You should also bear in mind that all employees are bound by the law to remit at least 8% of their monthly salary into their RSA.
What Makes Me Qualified for Pension as a Contract Worker?
Although the law states that you can receive a pension from your employer despite being a contract staff, your employer reserves the right to not remit pension payments into your RSA if the following requirements are not met simultaneously. Here they are:
Your employer must have not less than three workers
Your employer must have more than fifteen employees
And your employer must be a registered private company with not less than three workers and more than fifteen employees.
What this means is that if your employer does not meet the above requirements, then you can’t receive a pension even if you are a contract staff.
For employers who meet the above requirements and have decided to open a Retirement Savings Account (RSA) for their employees in line with the Contributory Pension Scheme (CPS) according to the Pension Reform Act (PRA) 2014 regulated by PenCom, Oak Pensions Limited is a reliable Pension Fund Administrator (PFA) to manage your employee’s pension contributions.
To start the process, call the Marketing Manager on 09087448661 or send an email to firstname.lastname@example.org.