PenCom Unveils Guidelines on Voluntary Contribution
The National Pension Commission (PenCom) has released official guidelines on voluntary contributions into the Contributory Pension Scheme (CPS).
The commission, in a statement to this effect made available to THISDAY said the move was in furtherance of its mandate of regulating the pension industry.
According to PenCom, the new guidelines would regulate the operations of voluntary pension contribution.
“It is pertinent to note that the Pension Reform Act (PRA) 2014 allows employees to make Voluntary Contributions into their Retirement Savings Account (RSA) in addition to their mandatory pension contributions, with the sole aim of enhancing their retirement benefits,” the regulator explained.
According to the guidelines, voluntary contributions shall be non-obligatory contributions made by any employee in the formal sector through the employer.
PenCom, said the objectives of the guidelines were to establish uniform set of rules for the operation of voluntary contributions and eligibility criteria for participation in the contributions, provide the procedure for making voluntary contributions as well as necessary safeguards and modalities for its withdrawals.
It is also to “utilise voluntary contributions for the purpose of enhancing future retirement benefits for active or mandatory contributors, encourage retirees under CPS, to utilise part or all of the voluntary contributions to augment their existing pension.
“To also assist retirees under defunct defined benefit scheme, exempted persons from the CPS and foreigners to save in order to cater for their livelihood during old age.”
The commission reminded contributors to be guided by the guidelines and urged them to direct all their enquiries pertaining the scheme to their respective Pension Fund Administrators.
The Pension Reform Act (PRA)2004 amended in 2014, recommended that both public sector and private sector employees open a RSA for their employees and contribute 10 per cent of employees’ monthly salary into his retirement savings account while deducting eight percent from the employee’s salary.
In order to ensure that employees save more to have more money to spend at old age, PenCom came up with the idea of voluntary savings.
PenCom had said it was putting in place measures that would significantly raise the contribution of pension funds to the country’s Gross Domestic Product (GDP) from five per cent presently, to about 10 per cent by next year.
The Acting Director General of the commission, Mrs. Aisha Dahiru-Umar, had in an interview, reiterated that the CPS had facilitated a pool of pension funds, which presently stood at N8.3 trillion as at June 2018.
“As you have rightly noted, there are enormous potential for growth of Nigerian pension funds to account for a significant proportion of the GDP.
“Indeed, the commission’s ongoing strategy implementation aims at attaining an increase in