PenCom Says 1,775 Workers Withdrew N3.09bn From Pension Contribution

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According to the National Pension Commission (PenCom), 1,775 workers withdrew N3.09 billion from their Retirement Savings Accounts managed by Pension Fund Administrators in six months after making additional voluntary payments.

This was stated in PenCom’s quarterly report on ‘Access to voluntary contributions,’ which our correspondent got.

In the third quarter of 2021, 766 active contributors withdrew N1.42 billion, while 988 active contributors withdrew N1.67 billion in the fourth quarter.

PenCom stated that “During the quarter under review, the commission granted approval of withdrawal from voluntary contributions amounting to N1.42bn to 787 contributors.”

It added that in the fourth quarter, “The department granted approval of withdrawal from voluntary contribution accounts amounting to N1.67bn to 988 contributors.”

According to PenCom’s guidelines, voluntary contributions are non-obligatory contributions made by any employee in the formal sector through the employer, for the purpose of enhancing future retirement benefits.

They are savings made over the statutory minimum of 18 per cent that is mandated by PenCom.

The guideline said that voluntary contributions would be taken from an employee’s legitimate income, which should not exceed a third of the month’s wage in accordance with the Labour Act of 1990.

After noticing a high rate of withdrawals, PenCom recently evaluated its voluntary contribution circular.

The circular’s key point was that voluntary donations may only be withdrawn once every two years and that further withdrawals would be based on incremental contributions since the last withdrawal.

“Furthermore, 50 per cent of the VC shall be domiciled as contingent, available for withdrawal within the stipulated timeframe,” it stated.

According to the commission’s guidelines, workers would only be able to make withdrawals from the voluntary account once in two years from the last approved withdrawal date.

It indicated that subsequent withdrawals would be on incremental contributions from the date of the last withdrawal.

According to the provisions, 50 per cent of the voluntary contributions made by mandatory RSA contributors would be available for withdrawal once in two years, and taxes for this category of the VC withdrawals are expected to be paid only on income earned.

It noted that the balance of the 50 per cent would be used to enhance benefits at retirement.

To make voluntary contributions, PenCom’s guideline requires the worker to inform his/her employer to make the necessary deductions from the monthly salary.

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