PenCom releases new guidelines for voluntary contribution withdrawal

New guidelines to regulate Additional Voluntary Contributions’
withdrawals by workers have been released by the National Pension
Commission.

One of the Pensions Fund Administrators, Leadway Pensure, said
participating customers would only be able to make withdrawals from
an AVC account once in two years from the last approved withdrawal
date.

The new guidelines also indicated that subsequent withdrawals
would be on incremental contributions from the date of last
withdrawal.

According to the PFA, 50 per cent of the AVC contributions made
by mandatory Retirement Savings Account contributors will be
available for withdrawal once in two years and taxes for this
category of the AVC withdrawals will be paid only on income
earned.

The balance of the 50 per cent would be used to enhance benefits
at retirement, the regulator said.

It added that the new guidelines would take effect from December
1, 2017.

PenCom also directed that foreign and exempted contributors
should be allowed to make full withdrawals once every two years
subject to deduction of taxes on amounts remitted and income
earned.

However, contributions of five years and above made by foreign
and exempted contributors would not be taxed, it was gathered.

Speaking on the new guidelines, the Executive Director, Sales
and Marketing, Leadway Pensure PFA, Olusakin Labeodan, explained
that the AVC had remained a good platform for individuals who hoped
to save for the future.

According to him, the world over, the AVC contributions are used
to augment final benefits, encouraging the RSA holders to embrace
the scheme.

He added that the benefit of tax savings would still remain
despite the update made by PenCom to the AVC withdrawal process,
while noting that the revised guidelines were mainly to curb the
high rate of the AVC withdrawals and its attendant effects on tax
accruing to the government.

“Additional Voluntary Contributions are savings made over the
statutory minimum of 18 per cent as mandated by PenCom,” he
said.

He added that Leadway Pensure customers are assured of excellent
service delivery, prompt payments and competitive returns.

The Pension Reform Act was enacted and signed into law in 2004
to provide a contributory scheme for the payment of retirement
benefits of employees in both the public and private sectors.

The Act mandated every employee to open a RSA in their name with
any PFA of their choice and notify the employers.

Employers, according to the law, were required to deduct eight
per cent of the workers’ monthly remuneration and add another 10
per cent, which should be paid into each employee’s RSA not later
than seven days after the salary is paid.

New guidelines to regulate Additional Voluntary Contributions’
withdrawals by workers have been released by the National Pension
Commission.

One of the Pensions Fund Administrators, Leadway Pensure, said
participating customers would only be able to make withdrawals from
an AVC account once in two years from the last approved withdrawal
date.

The new guidelines also indicated that subsequent withdrawals
would be on incremental contributions from the date of last
withdrawal.

According to the PFA, 50 per cent of the AVC contributions made
by mandatory Retirement Savings Account contributors will be
available for withdrawal once in two years and taxes for this
category of the AVC withdrawals will be paid only on income
earned.

The balance of the 50 per cent would be used to enhance benefits
at retirement, the regulator said.

It added that the new guidelines would take effect from December
1, 2017.

PenCom also directed that foreign and exempted contributors
should be allowed to make full withdrawals once every two years
subject to deduction of taxes on amounts remitted and income
earned.

However, contributions of five years and above made by foreign
and exempted contributors would not be taxed, it was gathered.

Speaking on the new guidelines, the Executive Director, Sales
and Marketing, Leadway Pensure PFA, Olusakin Labeodan, explained
that the AVC had remained a good platform for individuals who hoped
to save for the future.

According to him, the world over, the AVC contributions are used
to augment final benefits, encouraging the RSA holders to embrace
the scheme.

He added that the benefit of tax savings would still remain
despite the update made by PenCom to the AVC withdrawal process,
while noting that the revised guidelines were mainly to curb the
high rate of the AVC withdrawals and its attendant effects on tax
accruing to the government.

“Additional Voluntary Contributions are savings made over the
statutory minimum of 18 per cent as mandated by PenCom,” he
said.

He added that Leadway Pensure customers are assured of excellent
service delivery, prompt payments and competitive returns.

The Pension Reform Act was enacted and signed into law in 2004
to provide a contributory scheme for the payment of retirement
benefits of employees in both the public and private sectors.

The Act mandated every employee to open a RSA in their name with
any PFA of their choice and notify the employers.

Employers, according to the law, were required to deduct eight
per cent of the workers’ monthly remuneration and add another 10
per cent, which should be paid into each employee’s RSA not later
than seven days after the salary is paid.