924 workers withdraw N1.01 bn from RSAs in Q4 2020

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By Favour Nnabugwu

 

The Contributory Pension Scheme (CPS) witnessed the withdrawal of N1.01 billion by 924 workers from the voluntary contributions in their Retirement Savings Accounts (RSAs) with their Pension Fund Administrators (PFAs) in the Q4 quarter of 2020.

The National Pension Commission (PenCom), disclosed this in its 2020 fourth quarter report.

“During the quarter under review, the Commission granted approval to 924 contributors for the withdrawal of voluntary contributions amounting to N1,011,283,273.66”, the report stated.

An analysis of this quarter’s report revealed a decrease in withdrawal by workers when compared with that of the 2020 third quarter report which saw the sum of N2.18 billion withdrawal from about 1,286 workers under the scheme.

According to the guidelines on voluntary contribution under the CPS, PenCom 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

“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 the Pension Reform Act 2014 (PRA 2014) shall be covered under the guidelines for micro pensions.

“Voluntary contributions shall be remitted into and withdrawn from a duly registered RSA, managed by a licensed PFA”, the guideline says.

Stating the rules of general application, the Commission stated that 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.

In addition, PenCom noted that voluntary contributions should be made from employee’s legitimate income, which should not be more than one-third of the month’s salary in line with the Labour Act, 1990.

The guideline further stated that “all voluntary contributions must be remitted through an employer into the RSA.

“Failure to deduct or remit voluntary contributions within the time stipulated in Section 11 (6) of the PRA 2014 on behalf of a contributor by an employer shall attract the same penalty to be stipulated by the Commission.

“The Commission sets out the modalities and broad guidelines under which voluntary contributions can be administered.”

Speaking on the objectives of the guidelines, PenCom said they are to establish a uniform set of rules for the operation of voluntary contributions and eligibility criteria for participation in voluntary contributions.

Further outlining the objectives, the commission said it seeks “to provide the procedure for making voluntary contributions, and necessary safeguards and modalities for its withdrawals.

“To utilise voluntary contributions for the purpose of enhancing future retirement benefits for active or mandatory contributors. To encourage retirees under the CPS to utilise part or all of the voluntary contributions to augment their existing pension.

“The guidelines aim to assist retirees under defunct Defined Benefit, exempted persons and foreigners to save in order to cater for their livelihood during old age. To assist improvident individuals by ensuring that they saved in order to cater for their livelihood during old age.”

It is also important to note that the scheme provides a platform for an RSA holder to make voluntary contributions, in addition to the statutory contributions being made by him and his employer.

The above guidelines apply 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.

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