Highlights on the Guidelines for withdrawals from Voluntary Contributions
Dear Esteemed Customer,
On 16th November, 2017, the National Pension Commission (“PENCOM” or “the Commission”) released a circular that seeks to update the rules for withdrawals from voluntary contributions, with effect from 1st December, 2017. The salient points in this circular are:
1. The Pension Reform Act (PRA), 2014, allows voluntary contributions into the retirement savings account (RSAs) of individuals in active employment. Similarly, Section 4 (7) of PRA 2014 allows individuals who are exempted from the Contributory Pension Scheme (CPS) to voluntarily participate, subject to guidelines issued by the Commission.
2. Withdrawals from your voluntary contributions shall now be once every two (2) years from your last approved withdrawal date. Your subsequent withdrawals will be on the incremental voluntary contributions into your RSA after your last approved withdrawal.
3. Further to 1 & 2 above, a maximum of 50% of your voluntary contributions balance shall be available for withdrawal, while the remaining balance of 50% shall be fixed for pension to be utilized at the date of retirement to augment your retirement benefit.
4. For exempted individuals and foreigners, withdrawal shall be every two years, but subject to deduction of taxes on both income and principal when withdrawal is less than five years after the contributions were made.
5. Please be informed that if you make any single remittance of N5million and above as voluntary contribution, both the PFAs and PFCs are under obligation to report this single remittance to the Economic and Financial Crimes Commission (EFCC) in line with sections 10 of the Money Laundering (Prohibition) Act 2011.
6. We are obligated to ensure that all taxes deducted from voluntary contribution withdrawals are remitted to the appropriate tax authorities within 21days after the end of the month of withdrawal. In light of this, we will now require you to provide us with your personal Tax Identification Number (TIN) when applying for withdrawals from your voluntary contributions.
Should you require further clarification, please contact us on 01-4485490 or send an email to firstname.lastname@example.org.
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