PENCOM Issues Guidelines On Withdrawals From Voluntary Contributions

The National Pension Commission (PENCOM) on 16 November 2017 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.