Leadway Pensure updates on new AVC guidelines

Leadway Pensure, a pensions fund administrator in Nigeria has updated its customers and prospects on the newly released guidelines for Additional Voluntary Contributions’ (AVC) withdrawals.

According to the new guideline, participating AVC customers will now only be able to make withdrawals from an AVC account once in two years from the last approved withdrawal date. Also, subsequent withdrawals shall be on incremental contributions from the date of last withdrawal.

The new guideline also states that 50% of AVC contributions made by mandatory Retirement Savings Account (RSA) contributors will be available for withdrawal once in two years and taxes for these category of AVC withdrawals will be paid only on income earned.

The balance of 50% referred to above shall be used to enhance benefits at retirement. The new guideline took effect form December 1, 2017.

PenCom has also directed that foreign and exempted contributors be allowed to make full withdrawals once every two years subject to deduction of taxes on amounts remitted and income earned. However, contributions five years and above made by foreign and exempted contributors will not be taxed.

Speaking on the new guideline, Olusakin Labeodan, the Executive Director Sales and Marketing at Leadway Pensure, explained that AVC remains a good platform for individuals wanting to save for the future.

He also stated that the world over, AVC contributions are used to augment final benefits and encouraged RSA holders to embrace the scheme.

Mr. Labeodan said that the benefit of tax savings still remains despite the update made by PenCom to the AVC withdrawal process, adding that the revised guidelines were mainly to curb the high rate of AVC withdrawals and its attendant effect on tax accruing to government.