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Business News

PENCOM issues guidelines on withdrawals from voluntary contributions

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Pension

The National Pension Commission (PENCOM) this week issued a Circular to all Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) communicating new guidelines on withdrawals from voluntary pension contributions (VC). The new guideline, effective 1 December 2017, mandates compliance with the procedures by all licensed PFAs/PFCs or face sanctions from PENCOM.

The Circular was issued pursuant to the high trend of requests for withdrawals from VCs, usually shortly after contribution. According to PENCOM, this defeats the purpose of VC which is to enhance pension at retirement. It also results in payment of insignificant amount of income tax to tax authorities.

Key highlights of the guidelines are provided below:

  1. Limits to number of withdrawals: Withdrawals from VC account is limited to once every 2 years. Subsequent withdrawals shall also be limited to the incremental contributions from the last approved withdrawal date.
  2. Limits to amount of withdrawals and allocation of VC to retirement benefit: For mandatory contributors, 50% of the VC is available for withdrawal, subject to the limit on number of withdrawals. Taxes would be deducted on incomed earned in line with Section 10(4) of the Pension Reform Act, 2014.
    The remaining 50% is unavailable for withdrawal. It will be re-allocated to the contributor’s retirement benefit and available for use at retirement date.
  3. Restriction on withdrawals by exempted/foreign contributors: The limit on the number of withdrawals described above also applies to exempted/foreign contributors.
    However, exempted/foreign contributors can withdraw all VC amount after 2 years of contribution, subject to deduction of taxes on both income earned and principal amount when withdrawal is less than five years of the contribution.

It is expected that the Circular would curb the high rate of voluntary contribution withdrawals, ensure appropriate tax payments and strengthen the process of voluntary contribution administration. Employers are therefore advised to review the Circular and communicate this to their respective employees to ensure that they are properly guided on the implications of making and withdrawing voluntary pension contributions.

https://nairametrics.com/joint-tax-board-explains-voluntary-pension-contribution/

Christopher B. Pemu has a degree in Political Science from the University of Lagos. He joined Nairametrics in 2014 as News Editor and later as Managing Editor. He currently serves as the General Manager of Nairametrics.He takes pleasure in traveling, enjoys world politics and in sport, he loves watching football and tennis.

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    Billionaire Watch

    How young Elon Musk started and sold 3 businesses for $1.9bn before Tesla

    We look at the 3 successful businesses Elon Musk founded and sold for a collective $1.9bn before starting Tesla.

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    Elon Musk needs $20 billion wealth gain to clinch world's richest man title

    Success is never an accident. It is most times the result of many years of hard work and consistent effort. Elon Musk is popular today for his electric car company Tesla and his space project SPACE X. But long before these, he was already a multi-millionaire and had founded 3 successful companies which he sold for a collective $1.9bn.

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    Blaster ($500)

    A 12-year-old Elon Musk facing bullying in high school and a not so friendly dad taught himself how to code. According to the Inc. Magazine, he mastered BASIC a general-purpose coding language making use of a commodore PC he acquired himself. He later that year, sold the code for his PC game Blastar to a PC magazine for approximately $500.

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    After the sale of Blastar for $500, Elon Musk and his brother Kimbal took a $28,000 seed money from their dad and started another internet venture, Zip 2. They rented an office and slept in it because they couldn’t afford a house.

    Hotflex
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    Zip 2 was a web software startup that created online city guides for newspapers. The software was patronized by the New York Times and other notable media companies.
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    READ: Reinvestment: The powerful strategy used by the 2 richest men in the world

    X.com/PayPal ($1.5bn)

    Elon Musk continued on his journey of starting companies and selling them. He took $10m out of his earnings from the Zip 2 deal and joined the internet boom.

    He founded x.com an online platform he envisioned to be the future of internet banking. In 2000 X.com merged with a Fintech startup, Confinity, founded by Peter Thiel, another would-be billionaire. Both companies combined to become what we know as PayPal today. Elon musk was named CEO of PayPal and had the highest number of shares in the company.
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    READ: Elon Musk gains $25 billion in a day, as Tesla surges by 20%

    Stanbic 728 x 90

    What you should know

    Elon Musk has often stressed the need to be consistent and have strong work ethics. In a graduation ceremony by the USC Marshall School Of Business, Elon Musk shared his opinion on work ethics according to CNBC.

    You need to work super-hard. Work hard every waking hour,” Musk said in 2014.

    “If you do the simple math, and say if somebody else is working 50 hours [a week] and you’re working 100, you’ll get twice [as much] done in the course of a year as the other company.”

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    CAC sets 3-hour time line for company registration in 2021

    The CAC is prioritising the reduction of the registration circle for new companies to just 3 hours before the end of the year 2021.

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    CAC, Corporate Affairs Commission selects NIPOST as official courier partner

    The Corporate Affairs Commission (CAC) has said that following the successful deployment of an end-to-end registration module, it was now prioritising the reduction of the registration circle for new companies to just 3 hours before the end of the year 2021.

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    Abubakar noted that the challenges of the Covid-19 pandemic had adversely hampered CAC’s delivery timeline.

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    While bidding farewell to Seriki, the Registrar-General said he received the news of his appointment with mixed feelings as CAC was going to miss his tremendous support and guidance.

    Also speaking at the event, the Minister of Industry, Trade and Investment, Niyi Adebayo, described the outgoing CAC Chairman as a man of immense pedigree and endowed with enormous potential to justify the confidence reposed in him by the president.

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    In case you missed it

    • The CAC recently announced the upgrade of its website and online registration portal to include features, which allow for the automation of some selected services and processes, in line with the Federal Government’s mandate of improving the ease of doing business in Nigeria.
    • The selected services and processes include Electronic search of company records, Upgraded Companies Registration Portal for Pre-incorporation filings and Post incorporation filings.

     

    Stanbic 728 x 90

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