The National Pension Commission (PenCom) has mandated all Pension Fund Administrators (PFAs) to allow retirees and foreign contributors to withdraw all the Voluntary Contributions (VCs) in the Retirement Saving Accounts (RSA) at the expiration of their contract employment.
PenCom stated this in a circular entitled, Addendum to the Circular on Withdrawals from Voluntary Contributions, dated September 10, 2018, sent to all licensed PFAs and signed by Mohanned Datti, Head, Surveillance Department, PenCom.
According to him, the circular relates to cases of voluntary contributions made pursuant to Section 4 (7) of the Pension Reform Act 2014 and does not cover cases of additional voluntary contributions made to Section 4 (3) of the PRA 2014 by persons who are in active/mandatory service.
He noted that retirees under the Contributory Pension Scheme (CPS) shall be eligible to withdraw all the voluntary contributions in the RSA at the expiration of the contract employment or may choose to consolidate part or all to argument his/her monthly pension in line with Section 7 of the PRA 2014.
Retirees under the Defunct Define Benefits Scheme, and Exempted Employees, he said, shall be eligible to withdraw all the voluntary contributions in their RSA at the expiration of the contract employment.
On Foreign Contributors, he said they shall also be eligible to withdraw all the voluntary contributions in the RSA at the expiration of the contract employment or relocation to their country. He said tax treatment for the above mentioned categories shall be based on both income and principal amount when withdrawal is less than five years from the date the voluntary contributions was made.
Datti maintained that the clarification is made without prejudice to the provision of paragraphs 5.0 (c) (e) and 6.0 relating to mandatory/active contributors’ reporting requirements under the Money Laundering Act and tax treatment of contribution under the PRA 2014 and the relevant tax laws.
Head, Corporate Communications PenCom, Peter Aghahowa, said the circular was issued to PFAs due to complaints from the aforementioned parties on how some PFAs have denied them their voluntary contributions contrary to stipulated laws.
He said the Commission observed that some PFAs were treating voluntary contributions as part of pension benefits contrary to the circular issued on withdrawals of voluntary contributions.