PENCOM CAMPAIGN FOR TAX EXEMPTION FOR PENSION RETURNS

DG PENCOM, Mohammad Ahmad
The National Pension Commission (PenCom) is seriously campaign for tax exemption for pension returns along with strict enforcement of the Pension Reforms Act 2004 to ensure returns on investment of pension funds.
Director General of the commission, Mohammad Ahmad, said it would enhance retirement benefits.
While citing Sections 7 and 10 of the Pension Reform Act (PRA) 2004 that referred to tax exemption at the point of accumulation and payment of retirement benefits, but silent on taxation of income from investment of pension funds.
Ahmad, however said that to ensure real returns on investment of pension funds and ultimately enhance the retiree’s retirement benefits, the income earned on investment of pension funds should also be exempted from taxation.
The PenCom boss admonish for the amendment of Section sevens of the Act to include tax exemption on income from investment of pension funds.”
Chief Executive Officer, IBTC Pension Managers, Dr Demola Sogunle, in his own opinion said that tax exemption should be used by the government as away to encourage employers to embrace the pension scheme.
Sogunle point out that one of the ways the government could assist to ensure the success of the scheme is to engender strict enforcement of the Pension Reform Act 2004.
The introduction of the new scheme can induce nation-wide mass saving culture, therefore, he stress further that government needs to enforce strict sanctions against defaulting employers, in other to allows Pension Fund Administrators (PFAs) to accumulate assets that can be invested in financial markets.
Sogunle however point out one of the major challenges against the success of the scheme in the private sector is the fact that many employees are not yet register with a PFA, while some employers fail on their own side to remit or are defaulting in remitting contributions into their employees Retirement Savings Accounts (RSAs).
“The issue of defaulting may be a cog in the wheel of operation to the success of the contributions pension scheme, because it influences the proper record of the benefit payments to participants.
Therefore, a lot of clarification is required to ensure that employers and employees understand the benefits this would enable them to key into the contributory pension scheme, especially as it is mandatory by law,” he said