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PenCom Moves Against Using Pension Accounts for Money Laundering



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It added that the main thrust of the circular was that voluntary contributions could only be withdrawn once in every two years, while subsequent withdrawals would be on incremental contributions from the last withdrawal.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

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend




Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.


  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return



Crude oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

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Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather




Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

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