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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It added that the main thrust of the circular was that voluntary contributions could only be withdrawn once in every two years, while subsequent withdrawals would be on incremental contributions from the last withdrawal.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,, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Slip as Japan’s Rising Inflation Signals Rate Hikes



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Crude oil fell in early trading on Friday as concerns over sustained high interest rates in both Asia and the United States weighed on the outlook.

This trend is attributed to Japan’s increasing inflation, which is prompting expectations of imminent rate hikes by its central bank.

Brent crude edged declined by 11 cents to settle at $85.60 per barrel while the U.S. crude oil declined by 9 cents to $81.20 per barrel.

Recent data revealed that Japan’s core consumer prices rose by 2.5% in May compared to the same month last year. This increase marks a growth from the previous month, suggesting that the Bank of Japan is likely to raise interest rates in the upcoming months to curb inflation.

In the United States, data released on Thursday showed a decrease in the number of new unemployment claims for the week ending June 14, indicating continued strength in the job market.

This persistent robustness in employment raises the likelihood that the U.S. Federal Reserve will maintain higher interest rates for a longer period.

Higher interest rates typically have a dampening effect on economic activity, which can subsequently reduce oil demand.

The prospect of prolonged elevated interest rates in two major economies has therefore put downward pressure on crude oil prices.

Despite the downward trend, oil prices received some support from the latest figures from the Energy Information Administration (EIA).

The data showed a drawdown in U.S. crude inventories by 2.5 million barrels in the week ending June 14, bringing the total to 457.1 million barrels. This exceeded analysts’ expectations, who had predicted a 2.2 million-barrel reduction.

Also, gasoline inventories fell by 2.3 million barrels to 231.2 million barrels, contrary to forecasts that anticipated a 600,000-barrel increase.

“Gasoline finally came to life and posted its first strong report of the summer driving season,” remarked Bob Yawger, director of energy futures at Mizuho in New York, highlighting the surprising uptick in gasoline demand.

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Crude Oil

Nembe Creek Oil Field Halted After Leak, Impacting 150,000 bpd



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Nigeria’s oil output has taken a significant hit following the shutdown of the Nembe Creek oil field due to a major oil leak.

The Nembe Creek oil field, responsible for producing approximately 150,000 barrels of crude oil per day (bpd), was forced to cease operations on June 17, 2024.

The leak occurred on the Nembe Creek Trunk Line (NCTL), a critical pipeline that transports oil from the Nembe Creek oil field to the Bonny Oil Export Terminal.

The operator of the pipeline, Aiteo Eastern Exploration and Production Company, confirmed the leak and the subsequent shutdown in a statement released yesterday.

Aiteo reported that the leak was discovered during routine operations in the Nembe area of Bayelsa State, located in Nigeria’s oil-rich Delta region.

This region is notorious for environmental degradation due to decades of oil spills, which have severely impacted local agriculture and fishing industries.

Following the discovery of the leak, Aiteo activated its Oil Spill and Emergency Response Team and shut down all production from Oil Mining Lease (OML) 29 as a precautionary measure to prevent further environmental damage.

“While we regret the production losses and the potential environmental impact, our current priority is to expedite an efficient spill management process in line with regulatory standards and collaborate with all stakeholders to restore production and mitigate associated risks,” said Victor Okronkwo, Managing Director of Aiteo Eastern E&P.

The exact cause of the leak remains unknown. Aiteo emphasized that the shutdown was a precautionary step to contain the spill and minimize environmental harm.

The company has notified its joint venture partners and relevant regulatory bodies, including the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the National Oil Spill Detection and Response Agency (NOSDRA), about the incident.

This development comes as a setback for Nigeria, which holds Africa’s largest natural gas reserves and is a major oil producer.

The country’s oil sector has faced numerous challenges, including aging infrastructure, theft, and environmental issues, which have hindered its ability to maximize production and exports.

The Nembe Creek shutdown also highlights ongoing concerns about the safety and reliability of Nigeria’s oil infrastructure. The NCTL has been a frequent target of oil theft and sabotage, exacerbating the challenges of maintaining a steady oil output.

Energy analysts believe that the latest incident could impact Nigeria’s ability to meet its export commitments and exacerbate the country’s economic challenges.

The Nigerian government, under President Bola Tinubu, has been making efforts to attract investment into the energy sector to boost production and address infrastructure deficits.

“The government will hope this offers confidence not only in the quality of the Nigerian resource base, but also in the government’s pledge to improve ease of doing business,” said Clementine Wallop, director of sub-Saharan Africa at political risk consultancy Horizon Engage.

As Nigeria works to address the immediate spill and restore production, the broader implications for the country’s oil sector and its environmental impact remain to be seen.

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Crude Oil

Brent Crude Nears Seven-Week Highs as Market Eyes US Inventory Report



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Brent oil, the international benchmark for Nigerian crude oil, remained steady on Thursday, hovering just below seven-week highs as the escalating conflict in the Middle East raised concerns over potential supply disruptions.

At the same time, the market eagerly awaits U.S. inventory data for further indications of demand trends.

August Brent crude rose 28 cents, or 0.3%, to $85.35 a barrel while the U.S West Texas Intermediate (WTI) oil gained 13 cents, or 0.2%, to $81.70 a barrel.

“There was no WTI settlement on Wednesday due to a U.S. public holiday, which kept trading subdued,” noted Ricardo Evangelista, an analyst at ActivTrades.

“However, oil prices are likely to remain supported around current levels due to a growing geopolitical risk premium driven by conflict in the Middle East.”

Israeli forces have intensified their operations in the Gaza Strip, targeting areas in the central region overnight while tanks advanced into Rafah in the south.

The escalating violence has heightened fears of a broader conflict that could impact oil supplies from the region.

“Expectations of an inventory build appear to be overshadowing fears of escalating geopolitical stress for now,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.

Investors are keenly awaiting the release of U.S. inventory data from the Energy Information Administration (EIA) later on Thursday, delayed by a day due to the Juneteenth holiday.

An industry report released on Tuesday by the American Petroleum Institute (API) indicated that U.S. crude stocks rose by 2.264 million barrels in the week ending June 14, while gasoline inventories fell, according to market sources.

The summer season typically sees an uptick in oil demand due to increased refinery runs and weather-related risks.

“Ongoing production cuts by the OPEC+ group, combined with seasonal demand, should tighten oil balances and lead to inventory draws during the summer months,” J.P. Morgan commodities analysts wrote.

Refining margins have also improved, with the ICE gasoil futures premium to Brent crude jumping to $20.63 a barrel on Wednesday, a two-month high.

“Firmer fuel refining margins provide a healthy dose of encouragement for those expecting improvements on the demand side,” commented Tamas Varga, an analyst at PVM.

In other economic news, the Bank of England’s decision to keep its main interest rate unchanged at a 16-year high of 5.25% ahead of the national election on July 4 has been noted by market observers.

Higher interest rates generally increase the cost of borrowing, which can slow economic activity and dampen oil demand.

As the market braces for the upcoming EIA inventory report, analysts and traders are closely watching for any signals that could influence oil prices in the near term.

The delicate balance between geopolitical tensions and supply-demand fundamentals continues to play a critical role in shaping the oil market landscape.

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