A total of 1,775 workers withdrew N3.09bn from their Retirement Savings Accounts held by Pension Fund Administrators six months after making additional voluntary contributions, the National Pension Commission has said.
PenCom said this in its quarterly report on ‘Access to voluntary contributions’ obtained by our correspondent.
While 766 active contributors withdrew N1.42bn in the third quarter of 2021, 988 contributors withdrew N1.67bn in the fourth quarter of 2021.
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.
Voluntary contributions would be made from the employee’s legitimate income, which should not be more than a third of the month’s salary in line with the Labour Act, 1990, the guideline stated.
PenCom recently reviewed its circular on voluntary contributions after it observed a high incidence of withdrawals.
The main thrust of the circular was that voluntary contributions could only be withdrawn once every two years, while subsequent withdrawals would be on incremental contributions from the last withdrawal.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.
