VC Withdrawals

In line with the recent guidelines on Voluntary Contributions (VC) withdrawals by the National Pension Commission, the treatment of VC withdrawal have been summarized below for the different categories of clients:

  1. 1.    Active/Mandatory contributors:

These category of clients are eligible participants of the Contributory Pension Scheme (CPS); are less than the mandatory retirement age (50 years) OR still in active employment.

They can only withdraw 50% of their VCs after the contributions have been retained for a period of 2 years in their Retirement Savings Account (RSA). The 50% balance will form part of the RSA balance which will either be accessed as Lump Sum and programmed withdrawal or used to purchase an annuity upon retirement.

Subsequent withdrawals shall take place once every two years and will apply to only the additional contributions made after the last withdrawal. Only 50% of the additional contributions made after the last withdrawal can be withdrawn while the outstanding 50% will be accessed at retirement.

 

Please note that any income accrued on the VC(s) shall be taxable, where the withdrawal is made before the end of five (5) years from the date the VC(s) was made

  1. 2.    Retirees under the CPS:

This category covers any person who is retired and already receiving pension through either Programmed Withdrawal or Annuity.

Provided the VCs were remitted as a result of employment after retirement, retirees under the CPS shall be eligible to withdraw all the VCs in their RSAs only at the expiration of the contract employment or may choose to consolidate part or all to augment their monthly pension.

The tax treatment for this category shall be based on both income and principal amount when withdrawal is less than five years from the date the VCs were credited into the RSA.

  1. 3.    Foreigners

These are Non-Nigerian citizens residing and working in Nigeria.

They shall be eligible to withdraw all the Voluntary Contributions in the RSA at the expiration of the contract employment or relocation to their country, subject to the submission of all regulatory required documentation.

The tax treatment for this category shall be based on both income and principal amount when withdrawal is less than five years from the date the VCs were credited into the RSA.

  1. 4.    Employees of Closed Pension Fund Administrators (CPFAs)

Employees of licensed CPFA Sponsor Companies recruited prior to June 2014 are eligible to contribute voluntarily under the CPS.

These category of employees are eligible to withdraw their VCs only at the expiration of their contract, provided the VC has been retained in the RSA for two (2) years.

The tax treatment for this category shall be based on both income and principal amount when withdrawal is less than five years from the date VCs were credited into the RSA.

On the other hand, employees of CPFA Sponsor Companies recruited after June 2014 are mandatorily required to join the CPS by opening RSAs with any PFA of their choice and the administration of their VCs shall be in line with Active/Mandatory contributors.

Where the withdrawal is made before the end of five (5) years from the date the VC was credited into the RSA, tax shall be applied on income accrued only.

  1. 5.    Exempted Persons

These categories of persons include personnel of the Armed Forces, the Intelligence Secret Services of the Federation as well as any other person(s) who is entitled to retirement benefits under any pension scheme existing before the 25th day of June 2004, but as at that date had 3 or less years to retire.

The retirees under the Defined Benefit Scheme (DBS) and exempted employees shall be eligible to withdraw all the Voluntary Contributions in their RSA at the expiration of the contract employment.

The tax treatment for this category shall be based on both income and principal amount when withdrawal is less than five years from the date the VCs were credited into the RSA

 

Note that withdrawals on VCs are only tax exempt  where they have been retained in the RSA for 5 years or more.


Customer Care

24hrs Multilingual Call Centre
234-1-271 6000

Email

Send us an email

Live Chat
Available Mondays to Fridays. 8am - 5pm

  • Quick Links

  • Feedback Form

     
    Saving your details - Please Wait...
    First name * :
    Last name * :
    Landline * :
     
    Country code:
    Area code :
    Local number:
     
     
    Mobile *:
     
    Country code:
    Area code:
    Local number:
    Email *:
    Message Subject: