Voluntary Contributions: PenCom advises PFAs to permit retirees, foreigners full access on retirement

PENCOM National Pension Commission

The National Pension Commission has directed Pension Fund Administrators to permit retirees and foreign contributors access to full Voluntary Contributions in the Retirement Saving Accounts at the expiration of their employment.
PenCom gave the directive in a circular entitled “Addendum on Withdrawals from Voluntary Contributions”, dated September 20, and sent to all licensed PFAs and signed by the Head, Surveillance Department, PenCom, Mohammed Dattii, which was made available on Tuesday in Lagos.
The commission said that the directive was in accordance with Section 4 (7) of the Pension Reform Act (PRA) 2014 on Voluntary Contributions.
It said: “However, the directive did not cover contributions by persons who are in active and mandatory service as substantiated by Section 4 (3) of the PRA, 2014.”
The commission also noted that retirees under the Contributory Pension Scheme were eligible to withdraw all VCs in the RSA at the expiration of their employment.
“They may also choose to consolidate part or all to augument monthly pension in line with Section 7 of the PRA, 2014.”
PenCom said retirees under the defunct Defined Benefits Scheme and Exempted Employees, shall be eligible to withdraw all the VCs in the RSA at the expiration of the contract employment.
On foreign contributors, the commission said they shall also be eligible to withdraw all the VCs in the RSA at the expiration of the contract employment or relocation to their country.
It said: “However, the tax treatment for the above mentioned categories shall be based on both income and principal amount when withdrawal is less than five years from the date the voluntary contributions was made.”
The Head, Corporate Communications, PenCom, Peter Aghahowa, while confirming the development said the circular was issued to PFAs due to complaints from the parties on how some PFAs denied them their VCs contrary to stipulated laws.
He said the commission observed that some PFAs were using VCs as part of pension benefits contrary to the what the laws stipulated.
He said: “So, the commission has to rise up to the occasion before it gets out of hand.”