PENCOM Allows Low-Income Earners to Withdraw Total Retirement Savings

PENCOM introduces a policy enabling low-income earners to withdraw their entire retirement savings, offering financial relief and flexibility for economically disadvantaged Nigerians.

Low-income pensioners are now allowed to either withdraw their entire retirement savings at once or continue receiving their monthly pension while awaiting the approval of the Minimum Pension Guarantee.

This information comes from a memo issued by the National Pension Commission and signed by A.M. Salem, who is identified as the Head of Pencom’s Surveillance Department.

In the memo, which was acquired by our correspondent in Abuja on Monday and dated November 27, 2024, the commission stated that this development is a result of section 4.1 (g) in the updated regulations regarding the management of retirement and terminal benefits according to the new minimum wage set at N70,000.

Prior to this announcement, retirees were permitted to withdraw only one-third of their total RSAs.

The memo directed to pension fund administrators and custodians stated, “The commission has observed that on Monday, July 29, 2024, President Bola Tinubu signed the National Minimum Wage Bill into law.”

As a result, the National Minimum Wage Act has raised the minimum wage from N30,000.00 to N70,000.00.

According to Section 4.1 (g) of the Revised Regulation on the Administration of Retirement and Terminal Benefits, if a retiree’s Retirement Savings Account balance is insufficient to offer a monthly or quarterly pension or annuity amounting to at least one-third of the current minimum wage, they will be permitted to withdraw their entire RSA balance in full.

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As a result of the above, Pension Fund Administrators are instructed to use N70,000.00, which is the current National Minimum Wage, when processing retirement benefits in accordance with Section 4.1 (g) of the Regulation.

Retirees with monthly or quarterly pensions below N23,333.33—which is one-third of the current minimum wage of N70,000.00—should be given the option to either receive their remaining RSA balance as a lump sum or continue receiving their existing pension payments until the Minimum Pension Guarantee begins.

The memo indicated that requests for payments to retirees opting to receive the full balance from their RSAs in a lump sum should be submitted to the commission along with the documents listed below for review and approval.

The documents include a consent form indicating that the Pension Fund Administrator (PFA) adequately informed the retiree about the Minimum Pension Guarantee and he or she opted to receive the remaining balance in their Retirement Savings Account as a lump sum.

A physical application letter, signed by the retiree without an electronic signature, is required to withdraw the outstanding balance from the RSA.

Attached as Appendix 1 is the payment schedule template. Please take all necessary steps to ensure full compliance with this circular, which takes effect immediately.