Abuja – December 3, 2024
In a major policy shift, the National Pension Commission (PENCOM) has announced that low-income pensioners now have the option to withdraw their entire Retirement Savings Account (RSA) balances or continue receiving monthly pensions. This comes as the Minimum Pension Guarantee (MPG) awaits implementation.
The directive, detailed in a memo dated November 27, 2024, and signed by A.M. Salem, Head of PENCOM’s Surveillance Department, aligns with recent amendments to Section 4.1 (g) of the regulations governing retirement benefits.
Impact of Minimum Wage Increase
The adjustment follows the national minimum wage increase to ₦70,000, signed into law by President Bola Tinubu on July 29, 2024. Previously, retirees could only access one-third of their RSA balances, but the revised regulation permits full withdrawals for pensioners whose savings cannot provide monthly or quarterly pensions of at least one-third of the new minimum wage.
Key Provisions
Pensioners with monthly pensions below ₦23,333.33—equivalent to one-third of the minimum wage—are eligible to withdraw their full RSA balances. They also retain the option to continue receiving pensions under the current scheme until the MPG is implemented.
PENCOM’s directive to Pension Fund Administrators (PFAs) states:
“PFAs should apply the new minimum wage when processing retirement benefits. Retirees whose pensions fall below the threshold can either withdraw their remaining RSA balances in full or continue with their current pension payments.”
Withdrawal Requirements
Retirees opting for full withdrawal must submit the following documents to PENCOM:
- Consent Form: Signed confirmation indicating the retiree understands the MPG option and has opted for full withdrawal.
- Application Letter: A handwritten, signed request for the withdrawal.
- Payment Schedule Template: As specified in Appendix 1 of the directive.
Immediate Effect
The directive, which takes effect immediately, mandates Pension Fund Administrators and custodians to ensure strict compliance.
Implications for Pensioners
This development provides relief for low-income retirees, offering flexibility and immediate access to funds. However, the MPG’s pending implementation leaves questions about long-term financial security for pensioners without substantial savings.
As stakeholders adjust to the new directive, PENCOM’s policy underscores its commitment to aligning retirement benefits with the economic realities of Nigeria’s evolving minimum wage structure.