After making additional voluntary contributions, a total of N3.18bn was withdrawn by 2,210 workers from their Retirement Savings Accounts with their respective Pension Fund Administrators in six months.
While 1,286 active contributors withdrew N2.17bn in the third quarter of 2020, another 924 contributors withdrew N1.01bn in the fourth quarter of 2020.
The National Pension Commission said this in its quarterly report, ‘Access to voluntary contributions’.
PenCom stated, “During the third quarter, the commission granted approval for withdrawal of the sum of N2.18bn from the voluntary contribution accounts of 1,286 contributors.
“The commission granted approval to 924 contributors for the withdrawal of voluntary contributions amounting to N1,011,283,273.66.”
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 made over the statutory minimum of 18 per cent that is mandated by PenCom.
In line with the Labour Act, voluntary contributions would be made from an employee’s legitimate income, which should not be more than a third of the month’s salary 1990, the guideline stated.
PenCom in recent years 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 The main thrust of the circular was that voluntary contributions could only be withdrawn once in every two years, while subsequent withdrawals would be on incremental contributions from the last withdrawal.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 time frame,” it stated.
From the commission’s guidelines, workers are entitled to withdrawals from the voluntary account once in two years from the last approved withdrawal date. This, however translates that subsequent withdrawals would be on incremental contributions from the date of last withdrawal.
Also, 50 percent of the voluntary contributions made by mandatory RSA contributors will be available for withdrawal once in two years and taxes for this category of the VC withdrawals will be paid only on income earned.
It noted that the balance of the 50 per cent would be used to enhance benefits at retirement.