GUIDELINES ON VOLUNTARY CONTRIBUTION UNDER THE CONTRIBUTORY PENSION SCHEME
Guideline · Finance
Guidelines enable RSA holders to make voluntary contributions to their pension accounts beyond mandatory ones, with tax benefits and access rules. They target individuals saving for retirement, employers, and pension fund administrators. This encourages higher savings for a secure future.
GUIDELINES ON VOLUNTARY CONTRIBUTION UNDER THE CONTRIBUTORY PENSION SCHEME
What Is This Policy?
PenCom guidelines enabling RSA holders to make additional voluntary contributions to their pension accounts beyond the mandatory employer and employee contributions, with defined tax benefits and access rules.
Who Does It Target?
RSA holders wishing to save more for retirement Employers who want to make additional pension contributions for employees PFAs administering voluntary contribution accounts FIRS administering tax relief on voluntary contributions
What Does It Aim to Achieve?
Encourage higher retirement savings through voluntary top-up contributions by offering tax incentives and flexible access conditions that make additional pension saving attractive.
Key Features
Tax Relief: Voluntary contributions (up to 1/3 of total contribution) may be deducted from personal income tax, reducing the tax burden for active contributors. Flexible Access: Voluntary contributions held for at least 5 years may be withdrawn without paying tax on the accumulated returns. Investment in RSA: Voluntary contributions are invested alongside mandatory contributions in the contributor's chosen RSA fund. No Upper Limit: There is no statutory cap on the amount of voluntary contributions a person may make.
Current Status
Rollout Stage: Active Coverage: All RSA holders nationwide Beneficiaries: Active contributors seeking to boost retirement savings Funding: Self-funded by contributors
How to Access
Notify your PFA that you wish to make voluntary contributions Provide payment details for remittance Keep records of voluntary contributions for FIRS tax relief claims Application method: Initiate voluntary contributions with your PFA.
Important Terms
Withdrawals before 5 years attract full income tax on the accumulated returns Voluntary contributions are not included in employer default recovery claims Tax relief requires FIRS assessment and approval
Official Resources
Website: https://www.pencom.gov.ng Contact: National Pension Commission (PenCom)
Legal Framework
Issued under the regulatory powers of the National Pension Commission (PenCom) pursuant to the Pension Reform Act 2014. Voluntary contribution provisions draw on the personal income tax treatment under the Personal Income Tax Act (PITA) and the Finance Acts. Operates alongside the Investment Regulations for Pension Fund Administrators and the Code of Corporate Governance for Licensed Pension Operators. Aligns with OECD guidelines on voluntary pension savings incentives.