According to PenCom, “The Guidelines will boost Government’s Fight Against Financial Terrorism and Money Laundering and nip in the bud the dangers that could arise should contributors decide to use their RSAs to launder dirty money.
“The guidelines were designed to put in place measures that will allow contributors access a portion of their pension savings for payment of equity contributions in procuring first-time residential mortgages.
Pursuant to the referenced Section 89 (2), the guidelines provide the framework for the implementation of the section. It seeks to provide the operational modalities for pension fund administrators.”
The Commission noted that the Guidelines on Unilateral Withdrawals from Voluntary Contribution from Retirement Savings Accounts (RSAs) by Contributors will help to determine the eligibility requirements, procedures and documentation required to enable RSA contributors to access and utilise part of their RSA balances.
“The Guidelines is still a draft, the Commission will expose it to stakeholders for their input in due course. The TUC Rivers State Council should harmonise its position on the issue and make useful input into the guidelines before it is finalised. Also, TUC is represented on the Board of PenCom, so workers could use this channel to address their grievances.”
“Section 89 (2) of the Pension Reform Act 2014 provides that a Pension Fund Administrator may, subject to guidelines issued by PenCom, apply for a percentage of pension fund assets in the RSA,” the Act states.
Section 4(3) states that “any employee to whom this Act applies may, in addition to the total contributions being made by him and his employer; make voluntary contributions to his retirement savings Account.” Section 10(3) provides that “without prejudice to the previous provisions of sub-section (2) of this section, any income earned on any voluntary contribution made under Section 4(3) of this Act shall be subject to tax at the point of withdrawal.
However, TUC, River State Council in a press statement, titled: “We will Shut Down if PenCom Changes Rules on Voluntary Contribution Withdrawal Unilaterally and without recourse to the National Assembly’, threatened to embark on industrial action against the Commission. In the statement signed by the State TUC Chairman, Comrade Hyginus Chika Onuegbu, the Congress argued that en-bloc withdrawal of the total Voluntary Contributions by an RSA holder is not permissible until retirement.
The Congress argued that “the above is not only a significant change to the current practice but clearly at variance with the spirit and intent of Section 10(4) of the 2014 Pension Reform Act which allows withdrawals at any time from the additional Voluntary contribution made under section 4(3) of the Pension Reform Act 2014.”
It also stated that the above provisions were at variance with what obtains in the industry now saying non-restrictions on withdrawal formed the basis of Contributors’ decision to save more using their RSAs; as such changing the rules midway would be inimical to the interest of contributors. “Subsequent withdrawals, after the above, shall be based only on additional contributions made into the RSA after the last withdrawal. The balance of 80 per cent after the above shall not be accessed until retirement.
TUC Rivers State will commence the process of shutting down the economy of Rivers state (without any notice or ultimatum) if PenCom goes ahead with these illegal changes in the proposed guidelines without due engagement of the Trade Unions and the workers they represent, and without the due process of law in a constitutional democracy.”
Credit: Vanguard
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