Joy Agwunobi
The National Pension Commission (PenCom) has introduced a policy allowing low-income earners the option to either withdraw their entire Retirement Savings Account (RSA) balance or continue receiving their current pension payments while awaiting the implementation of the Minimum Pension Guarantee.
This development aligns with the revised regulations on retirement and terminal benefits, particularly Section 4.1(g), which considers the recent increase in Nigeria’s minimum wage to ₦70,000.
The announcement, detailed in a memo dated November 27, 2024, and signed by A.M. Salem, head of the surveillance department at PenCom, marks a shift from the previous policy that permitted retirees to withdraw only one-third of their RSA balance.
The memo, directed to Pension Fund Administrators (PFAs) and custodians, highlighted that President Bola Tinubu had signed the National Minimum Wage Bill into law on July 29, 2024, raising the minimum wage from ₦30,000 to ₦70,000.
Consequently, Section 4.1(g) of the revised regulations stipulates that retirees whose RSA balances cannot provide a monthly or quarterly pension of at least one-third of the minimum wage (₦23,333.33) can opt to withdraw their savings in full.
PenCom directed PFAs to adopt the new minimum wage of ₦70,000 when processing retirement benefits in compliance with the updated regulations. Retirees with pensions below ₦23,333.33 are now given two options: to withdraw the remaining balance in their RSA accounts outright or to continue receiving their current pensions until the Minimum Pension Guarantee takes effect.
For retirees choosing the lump-sum withdrawal, the memo outlined specific documentation requirements, including:
A consent form confirming that the retiree was properly informed about the Minimum Pension Guarantee and opted for the lump-sum withdrawal.
A physical application letter, signed by the retiree (electronic signatures are not accepted).
A payment schedule following the prescribed template in Appendix 1 of the circular.
PenCom emphasised the importance of compliance, instructing PFAs to take all necessary steps to implement the circular, which is effective immediately.
