A total number of 1,286 contributors under the Contributory Pension Scheme withdrew about ₦2.18bn from their Voluntary Contributions (VC) in their Retirement Savings Accounts (RSAs) in the third quarter of 2020, PenCom has disclosed.
“During the quarter under review, the Commission granted approval for withdrawal of the sum of ₦2.18bn from the voluntary contribution accounts of 1,286 contributors,” the report stated.
The guidelines on voluntary contribution under the CPS states that the main purpose of the Pension Reform Act 2014 is to introduce a pension system that is sustainable and has the capacity to achieve the ultimate goal of providing a stable, predictable and adequate source of retirement income for each employee in Nigeria.
It said, “The Pension Reform Act 2014 allows employees to make, voluntary contributions into their Retirement Savings Account, in addition to their mandatory pension contributions, with the sole aim of enhancing their retirement benefits.
“Voluntary contributions under these guidelines shall be non-obligatory contributions made by any employee in the formal sector through the employer.
“Employees of organisations with less than three employees as well as self-employed persons as provided in Section 2 (3) of Pension Reform Act 2014 (PRA 2014) shall be covered under the guidelines for micro pensions.”
According to the Commission, any eligible contributor under these guidelines must notify his employer in writing of his intention to make voluntary contributions and the amount be deducted from his emoluments and remitted as voluntary contributions.
It stated that voluntary contributions should 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.
All voluntary contributions must be remitted through an employer into the RSA, it stated.
The Commission sets out the modalities and broad guidelines under which voluntary contributions could be administered. According to PenCom, the objectives of the guidelines are to establish a uniform set of rules for the operation of voluntary contributions and eligibility criteria for participation in voluntary contributions.
It also provided the procedure for making voluntary contributions, and necessary safeguards and modalities for its withdrawals.
The Commission seeks to utilise voluntary contributions for the purpose of enhancing future retirement benefits for active or mandatory contributors.
It also aimed to encourage retirees under the CPS to utilise part or all of the voluntary contributions to augment their existing pension.
The guidelines aimed to assist retirees under defunct defined benefit, exempted persons and foreigners to save in order to cater for their livelihood during old age. It aimed to assist improvident individuals by ensuring that they saved in order to cater for their livelihood during old age.
The guidelines applied to any employee in the public service of the federation, the public service of the Federal Capital Territory, the public service of the State Government, the public service of the Local Government Councils and the private sector.It provides a platform for an RSA holder to make voluntary contributions, in addition to the statutory contributions being made by him and his employer.
Source: Economic Confidential