Additional Voluntary Contribution
Section 4 (3) of the PRA 2014 provides a platform for an RSA holder to make Voluntary Contributions, in addition to the statutory contributions being made by him and his employer. Every employee covered under the Contributory Pension Scheme is eligible to make Voluntary Contributions.
Voluntary Contributions (VC) are extra contributions you can voluntarily decide to remit into your Retirement Savings Account (RSA) in addition to the mandatory pension contributions. Voluntary Contributions are designed in a way to augment your pension contributions at retirement, such that as an RSA Holder, you can have a more comfortable and decent retirement.
Like the mandatory contributions, Voluntary Contributions are deducted from your monthly salary by your employer and remitted into your Tangerine Pensions Retirement Savings Account along with your regular pension contributions. Voluntary Contributions differs from other regular savings you may have, as they are deducted from your salary before tax. Voluntary Contributions shall be made from employee’s legitimate income, which shall not be more than 1/3 of the month’s salary in line with the Labour Act, 1990
Voluntary Contributions can be accessed once every 2 years provided such contributions have stayed up to a minimum of 24 months in your Retirement Savings Account. Voluntary Contributions are tax-exempt. However, income earned on contributions (not principal) will be taxed if withdrawal is being made before 5 years.
Benefits of making Voluntary Contributions
- Adds to the value of your retirement savings.
- It is largely voluntary and convenient as contributors can decide the frequency of contribution (i.e. monthly or quarterly, bi-annually or annually).
- Provides tax savings if not withdrawn within 5years as withdrawals after 5 years of remittance is tax-free.
- It can be withdrawn partly or fully at any time.
- It serves as a form of targeted savings towards meeting other personal or future plans and projects like redemption of mortgage, payment of school fees or dream vacation.
Documents required for processing withdrawal of Voluntary Contributions
- Letter of application.
- One passport photograph.
- Means of identification.
- Bank details verification form.
- Last pay slip (Optional).
- Any other relevant document that may be required.