PenCom Restricts Withdrawal from Voluntary Pension Contribution
The National Pension Commission has released a new Circular on Voluntary Pension Contribution. The Circular aims to curb high VC withdrawal, ensure appropriate tax payments & strengthen the process of VC administration in line with Draft Guideline on VC to be issued by the Commission. The Circular is effective 1 December 2017.
The time frame for withdrawal from VC shall be once every 2 years from the last approved withdrawal date. Subsequent withdrawals shall only be on the incremental contributions from the date of last withdrawal.
Mandatory Contributors will only be able to withdraw 50% of the balance in their voluntary contribution every 2 years while the balance of 50% shall be left to augment the contributors’ retirement benefit and accessible when the contributor retires. The first 50% withdrawable balance shall be subject to income tax.
For exempt/foreign contributors, they are also bound by the restriction of withdrawing once every two years, but they are allowed to withdraw all the funds in their VC account after two years of contribution. Tax will be deducted on any withdrawal made within 5 years.