To break the short intervals between the date of contributions and withdrawals that often results in significant tax payable to relevant tax authorities, the National Pension Commission (PenCom) has indicated that all pensioners would only be able to withdraw from their contributions once in every two years.
To effect this policy, PenCom has directed that all Pension Funds Administrators (PFAs)/Pension Funds Custodians (PFCs) must ensure that withdrawals from voluntary contributions is only allowed as stated in the new directive. In addition, PenCom indicated that “subsequent withdrawals shall only be on the incremental contributions from the date of last withdrawal.”
Recall that in March, 2018, PenCom released two separate Public Notices (PNs) to employers and employees on certain compliance requirements with the Pension Reform Act (PRA), 2014. The PNs reiterated the provisions of Section 4(5) of the PRA, 2014, which allows employees under the Contributory Pension Scheme (CPS) to contribute voluntarily in addition to the mandatory contributions into their respective Retirement Savings Account (RSA) to leverage the augmentation of their pension at retirement.
In a similar vein, PenCom through a public notice issued in May, 2018, disseminated a draft framework for Micro Pension Plan for stakeholders consideration and comments. The framework which was released, sought to extend pension coverage to employees of organisations with less than three employees and self-employed persons in accordance with the provisions of Section 2(3) of the 2014 PRA. Upon implementation, the framework will ensure provision of retirement benefits to the Micro Pension Contributors (MPCs) through clearly spelt-out guidelines on operational modalities for the Micro Pension Plan.
In addition to the operational modalities, the framework also proposes strategies for securing participation in the plan, and minimum requirements for participation by licensed pension fund administrators and custodians.
For 2018 to 2020, PenCom in June, 2018, made public the revised fee structure for the pensions industry. The revised fees cover charges by the commission and PFAs/PFCs.