The National Pension Commission (PENCOM) has announced that low-income retirees can now choose to withdraw their total retirement savings or continue receiving their monthly pensions until the approval of the Minimum Pension Guarantee.
This development is outlined in a memo, signed by A.M. Salem, the Head of the Surveillance Department at PENCOM, dated November 27, 2024.
It follows the introduction of Section 4.1 (g) in the revised regulation for managing retirement and terminal benefits, in alignment with Nigeria’s new minimum wage of N70,000.
Previously, retirees were allowed to access only one-third of their total Retirement Savings Accounts (RSAs) at the time of retirement.
However, with the new regulation, retirees whose monthly pensions are less than one-third of the minimum wage (approximately N23,333.33) will now be allowed to either withdraw the entire balance in their RSA or continue receiving their pension payments until the Minimum Pension Guarantee is established.
The memo, addressed to pension fund administrators and custodians, refers to President Bola Tinubu’s signing of the new National Minimum Wage Bill into law on July 29, 2024, which raised the national minimum wage from N30,000 to N70,000.
The new provision under Section 4.1 (g) of the revised pension regulation states that if a retiree’s RSA balance is insufficient to provide a monthly pension of at least N23,333.33, the retiree can choose to receive the full amount in the RSA as a lump sum.
Pension fund administrators have been instructed to process retirement benefits using the new N70,000 minimum wage and ensure compliance with the updated regulation.
Retirees who choose to receive their full RSA balance in a lump sum must submit a signed consent form, a formal withdrawal request, and a payment schedule for approval by PENCOM.
This change takes immediate effect, signaling a significant shift in the handling of pension withdrawals for retirees with lower monthly benefits.
