Yemisi Izuora
The National Pension Commission (PenCom) has clearly stated that its new proposed guideline would boost Government’s Fight Against Financial Terrorism and Money Laundering.
The agency also stated that it help nip in the bud the dangers that could arise should Contributor decide to use his Retirement Savings Account (RSA) to launder dirty money.
PenCom also noted that the Guidelines is still a Draft and that the Commission will expose it to stakeholders for their input in due course.
The clarification was prompted by threat issued by the River State Council of the Trade Union Congress of Nigeria (TUC), titled “We will Shut Down if PenCom Changes Rules on Voluntary Contribution Withdrawal Unilaterally and without recourse to the National Assembly.”
In the threat 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 percent of the balance standing in the Voluntary Contributions portion of the RSA, not more than once in every 4 years.
The congress further noted that subsequent withdrawals, after the above, shall be based only on additional contributions made into the RSA after the last withdrawal and that the balance of 80 percent after the above shall not be accessed until retirement.
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 agency in reaction 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.
According to PenCom, 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 noted that 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” Emeka Onuora, PenComs head of corporate communications said in a statement.
Onuora explained that Voluntary Contributions into RSAs are meant to boost Contributors’ final pension and not a savings account that could be drawn at will.