The National Pension Commission (PenCom) has announced that low-income retirees can now withdraw their entire Retirement Savings Account (RSA) balance en bloc or opt to continue receiving their regular pensions. This directive is pending the implementation of the Minimum Pension Guarantee (MPG).
The update was contained in a memo signed by A.M. Salem, Head of PenCom’s Surveillance Department. Dated November 27, 2024, the memo, obtained in Abuja, was addressed to Pension Fund Administrators (PFAs) and custodians. It highlights changes in the administration of retirement and terminal benefits following Nigeria’s recent minimum wage increase to ₦70,000.
Previously, retirees were restricted to withdrawing only one-third of their total RSA balance. However, the memo cites Section 4.1 (g) of the revised regulation, which allows retirees whose RSA balances cannot provide a monthly pension or annuity of at least one-third of the minimum wage to withdraw the entire balance.
“The Commission has noted that President Bola Tinubu, on Monday, July 29, 2024, signed the National Minimum Wage Bill into law,” the memo stated. “Accordingly, the new National Minimum Wage Act increased the minimum wage from ₦30,000 to ₦70,000.”
It further explained: “Retirees whose monthly or quarterly pensions are less than ₦23,333.33, representing one-third of the current minimum wage, are now allowed to choose between receiving the outstanding balance in their RSAs en bloc or continuing to receive their current pensions pending the commencement of the Minimum Pension Guarantee.”
Implementation Guidelines
The directive mandates PFAs to process retirement benefits using ₦70,000 as the baseline minimum wage, ensuring compliance with Section 4.1 (g) of the regulation. For retirees opting to withdraw their balances en bloc, PFAs must forward payment requests to PenCom along with the required documents for approval.
These documents include:
- Consent Form: A form signed by the retiree indicating they were properly informed about the MPG before opting to withdraw their balance.
- Application Letter: A handwritten and signed application letter (no electronic signatures) requesting the withdrawal.
- Payment Schedule: The template provided in the memo.
“All necessary measures must be taken to ensure full compliance with this circular,” the memo emphasized, adding that the policy takes immediate effect.
This move is seen as a significant step towards providing financial flexibility for low-income retirees, aligning pension policies with the realities of the new economic landscape.
