The National Pension Commission (PenCom) has announced that low-earning pensioners can now choose to withdraw their entire retirement savings at once or continue receiving their monthly pensions.
This change comes as part of the implementation of the new Minimum Pension Guarantee, following the recent adjustment of the national minimum wage to N70,000.
In a memo dated November 27, 2024, and signed by A.M. Salem, Head of PenCom’s Surveillance Department, the commission clarified that this new policy stems from Section 4.1(g) of the revised regulation on the administration of retirement and terminal benefits.
The revision aligns with the increase in the national minimum wage, which was signed into law by President Bola Tinubu on July 29, 2024, raising the minimum wage from N30,000 to N70,000.
Prior to this update, retirees were only allowed to withdraw one-third of their total Retirement Savings Account (RSA) balance.
However, with the new regulation, retirees whose monthly or quarterly pensions fall below N23,333.33—equivalent to one-third of the new minimum wage—can now choose to access their entire RSA balance or continue to receive their pension until the Minimum Pension Guarantee comes into effect.
PenCom’s memo outlined the following instructions for Pension Fund Administrators (PFAs) and custodians:
The current National Minimum Wage of N70,000 should be applied when processing retirement benefits.
Retirees who earn less than N23,333.33 in monthly/quarterly pensions are permitted to select either a lump sum withdrawal of their remaining RSA balance or continue receiving their pension.
Retirees opting for the lump sum withdrawal must submit the necessary documents for approval, including:
A consent form confirming that the retiree was properly informed about the Minimum Pension Guarantee and chose the en bloc withdrawal.
A signed application letter requesting the withdrawal (note: electronic signatures are not accepted).
The payment schedule, as outlined in the provided template.
PenCom emphasized that full compliance with this circular is mandatory, and the new directive takes effect immediately.
