The National Pension Commission (PenCom) has explained guidelines governing unilateral withdrawals from voluntary contribution from Retirement Savings Accounts (RSAs) by contributors
PenCom’s position is being made known following mild disagreements that are already building between the commission and the River State Council of the Trade Union Congress of Nigeria (TUC) over possible changes in the rules.
The River State Council of the Trade Union Congress of Nigeria (TUC) had recently issued a Press Statement, titled “We will Shut Down if PenCom Changes Rules on Voluntary Contribution Withdrawal Unilaterally and without recourse to the National Assembly.”
In the Statement that was signed by the State TUC Chairman, Comrade Hyginus Chika Onuegbu the Congress threatened to embark on industrial action should the Commission implement the yet to be released “Guidelines on Unilateral Withdrawals from Voluntary Contribution from Retirement Savings Accounts (RSAs) by Contributors.”
The Congress noted that the guidelines still in the making provides that: any person making Voluntary Contributions to his/her RSA in addition to the statutory contributions made by him and his employer, may withdraw up to 20% of the balance standing in the Voluntary Contributions portion of the RSA, not more than once in every 4 years.
“Subsequent withdrawals, after the above, shall be based only on additional contributions made into the RSA after the last withdrawal; the balance of 80% after the above shall not be accessed until retirement; En bloc withdrawal of the total Voluntary Contributions by an RSA holder is not permissible until retirement”, it stated.
The Congress argued that “the above is not only a significant change to the current practice but clearly at variance with the spirit and intent of Section 10(4) of the 2014 Pension Reform Act which allows withdrawals at any time from the additional Voluntary contribution made under section 4(3) of the Pension Reform Act 2014.” It also stated that the above provisions were at variance with what obtains in the industry now saying non-restrictions on withdrawal formed the basis of Contributors’ decision to save more using their RSAs; as such changing the rules midway would be inimical to the interest of Contributors.
The group therefore, called on other labour unions to resist this move and threatened that “TUC Rivers State will commence the process of shutting down the economy of Rivers state (without any notice or ultimatum) if PenCom goes ahead with these illegal changes in the proposed guidelines without due engagement of the Trade Unions and the workers they represent, and without the due process of law in a constitutional democracy.”
But the National Pension Commission in a statement issued yesterday pointed out that these provisions do not negate Section 4(3), Section 10(4) or any other Section in the Pension Reform Act, 2014 since they addressed only the taxation of pension fund and not mode of Withdrawal of Voluntary Contributions from RSAs.
PenCom in the statement signed by its Head Communication, Emeka On-uora stated that “Section 4(3) states that “any employee to whom this Act applies may, in addition to the total contributions being made by him and his employer; make voluntary contributions to his retirement savings Account.” Section 10(3) provides that “without prejudice to the previous provisions of sub-section (2) of this section, any income earned on any voluntary contribution made under Section 4(3) of this Act shall be subject to tax at the point of withdrawal where the withdrawal is made before the end of 5 years from the date the voluntary contribution is made.”
The Commission therefore clarifies as follows: “there are indications that some Contributors may be confusing RSAs to be the same as Bank Accounts. RSAs are not the same as Bank Accounts, so PenCom needs to discourage this practice; voluntary Contributions into RSAs are meant to boost Contributors’ final pension and not a savings account that could be drawn at will”.
It further added that “the Guidelines will boost Government’s Fight Against Financial Terrorism and Money Laundering and nip in the bud the dangers that could be arise should Contributors decide to use his RSAs to launder dirty money”.
It said the guidelines is still a draft and that the Commission will expose it to stakeholders for their input in due course.
“The TUC Rivers State Council should harmonise its position on the issue and make useful input into the Guidelines before it is finalised. Also, TUC is represented on the Board of PenCom, so workers could use this channel to address their grievances”, PenCom advised.
– Anthony Awunor