A total of 2,210 workers withdrew N3.18bn from their Retirement Savings Accounts with their respective Pension Fund Administrators in six months after making additional voluntary contributions, the National Pension Commission has said.
PenCom said this in its quarterly report, ‘Access to voluntary contributions’ obtained by our correspondent on Monday.
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.
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.”
It added that in the fourth quarter, “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.
They are savings made over the statutory minimum of 18 per cent that is mandated by PenCom.
Voluntary contributions would be made from 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 in recent years reviewed its circular on voluntary contributions after it observed 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The main thrust of the circular was that voluntary contributions could only be withdrawn once in every two years, while subsequent withdrawals would be on incremental contributions from the last withdrawal.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 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 last withdrawal.
According to the provisions, 50 per cent 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.
To make voluntary contributions, PenCom’s guideline requires the worker to inform his employer to make the necessary deductions from his monthly salary.