The National Pension Commission (“PENCOM”) on 16th November 2017 released guidelines to govern withdrawals from Additional Voluntary Contributions (“AVC”).
In the past few years, the government has raised concerns about the frequency of withdrawals of AVC and the effect on the tax payable to the tax authorities. The guidelines are aimed at curbing the high rate of AVC withdrawals and its attendant effect on tax accruing to the government.
Consequently, the following rules will apply to AVC withdrawals with effect from 1st December 2017.
- The time frame for the withdrawal from an AVC will be once every Two (2) years from the last approved withdrawals date.
- Subsequent withdrawals shall be on incremental contributions from the date of last withdrawal.
- Fifty (50%) of AVC contributions made by mandatory RSA contributors shall be available for withdrawal once in two years. Taxes for these category of AVC withdrawals will be paid only on income earned. The balance of Fifty Percent (50%) shall be used to enhance benefits at retirement.
- Foreign and exempted contributors will also be allowed to make full withdrawals (100%) after Two (2) years subject to deduction of taxes on amounts remitted and income earned when the withdrawal is less than 5 years after contribution.In addition, PFA’s have been mandated to report any single contribution into an individual’s account of Five million naira (N5,000,000.00) to the Economic and Financial Crimes Commission (“EFCC”).