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PenCom Moves Against Using Pension Accounts for Money Laundering

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  • PenCom Moves Against Using Pension Accounts for Money Laundering

As part of the efforts to prevent workers from using their pension accounts for money laundering, operators will begin to investigate workers who make voluntary contributions of N5m and above into their Retirement Savings Accounts.

The National Pension Commission disclosed this in its new guidelines for voluntary contributions under the Contributory Pension Scheme.

A section of the guideline read, “In line with the Money Laundering Act 2011 and Nigerian Drug Law Enforcement Agency requirement, Pension Fund Custodian shall report any single voluntary contribution lodgement of N5m and above. PFC shall forward a copy of the report on such lodgement to the relevant Pension Fund Administrator.”

The commission had earlier stated that it became imperative for it to review the provisions for voluntary contribution under the CPS to address some concerns which include combating money laundering, after it observed high incidence of withdrawals.

Additional voluntary contributions are savings made over the statutory minimum of 18 per cent mandated by PenCom.

It stated, “The circular was necessitated by the observed high rate of withdrawals from the voluntary contributions by pension contributors, which appeared to negate the main purpose of augmenting pensions at retirement. In addition, the commission was also concerned about ensuring strict adherence to anti-money laundering provisions and payment of relevant taxes.”

Due to this action, the commission said it was providing further support to the current administration’s main thrust of enhancing transparency in all facets of economic activities.

It added that the main thrust of the circular was that voluntary contributions could only be withdrawn once in every two years, while subsequent withdrawals would be on incremental contributions from the last withdrawal.

The commission noted that the Pension Reform Act 2014 allowed employees to make voluntary contributions into their RSAs in addition to their mandatory pension contributions, with the sole aim of enhancing their retirement benefits.

It explained that voluntary contributions under the guidelines would be non-obligatory contributions made by any employee in the formal sector through the employer.

“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,” it stated.

According to the guidelines, voluntary contributions will be made from employee’s legitimate income, which shall not be more than a third of the month’s salary in line with the Labour Act, 1990.

It added that all voluntary contributions made by the active or mandatory contributors shall be retained in the RSA for a minimum of two years before access.

The PFA, it added, would ascertain the portion of the contributions that qualified for withdrawal based on the two years’ rule, before withdrawal by an applicant.

For active contributors, it added that the voluntary contributions section of the RSA statement would be divided into two which are.

“50 per cent shall be the contingent, available for withdrawal, as stated in Section 5 of these guidelines; and 50 per cent fixed for pension shall only be utilised at the date of retirement to augment pension,” PenCom stated.

As provided in section 10 (4) of the PRA 2014, any income accrued on voluntary contributions would be taxable in accordance with relevant tax laws, where the withdrawal was made before the end of five years from the date the voluntary contribution was made.

“The tax deductions shall be based on both income earned and principal amount when withdrawal is less than five years for the exempted, foreign, retirees under the defunct Defined Benefit Scheme and retirees under the CPS,” the guideline read.

PenCom stated that the extra savings made by the worker would be remitted and treated as voluntary and not mandatory contributions.

“PFAs shall be required to review the status of each registered contributor and classify the contributions remitted in the RSA as voluntary and mandatory,” it added.

Where an active or mandatory contributor retired from their employment, it added that the balance of their “fixed” voluntary contribution would be consolidated with their accumulated statutory contributions and accessed either as Programmed Withdrawal or Retiree Life Annuity in line with Section 7 of the PRA 2014.

“At retirement, the contributor shall sign a consent form which would indicate the total sum of the contingent contribution (if any) to augment the pension,” the guideline read.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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