Every contributor under the scheme has the option to save an additional amount every month. This is irrespective of the mandatory 8% employee contribution and 10% employer contribution.
This additional contribution is called AVC (Additional Voluntary Contribution). This saving is entirely at the discretion of the contributor in terms of the amount and the frequency of contributions.
This gives a contributor freedom to decide how much to save monthly based on income and expenses. In addition any amount saved is tax exempt, as provided for in the PRA Act 2014.
In terms of eligibility to contribute, employees in formal employment can participate and include the following:
- Active contributors to the Retirement Savings Account (RSA)
- Foreigners in formal employment in Nigeria
- Employees whose Employer operates a pension scheme approved by PENCOM e.g. CPFA (Closed Pension Fund Administrator)
- Any employee who retired under the Contributory Pension Scheme (CPS) or any other pension scheme and secures another employment
The National Pension Commission (PENCOM) recently released a draft guideline on Additional Voluntary Contribution that seeks to update the eligibility, rules and withdrawal of voluntary contributions.