Low-income pensioners now have the option to withdraw their entire Retirement Savings Account (RSA) balance or continue receiving monthly pensions, pending the implementation of the Minimum Pension Guarantee.
This directive was detailed in a memo issued by the National Pension Commission (PENCOM) and signed by A.M. Salem, Head of the Surveillance Department. Dated November 27, 2024, the memo was addressed to pension fund administrators and custodians.
The change aligns with the new minimum wage of ₦70,000 as stipulated in the updated Section 4.1 (g) of the revised regulation on retirement and terminal benefits administration.
Previously, retirees were only permitted to withdraw one-third of their RSA balance. However, the memo explained that the National Minimum Wage Act, signed into law by President Bola Tinubu on July 29, 2024, necessitated this adjustment.
Under the revised guidelines:
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Eligibility: Retirees whose RSA balances cannot provide a monthly or quarterly pension of at least one-third of the current minimum wage (₦23,333.33) may withdraw the full balance or opt to continue receiving periodic pensions.
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Calculation Basis: The new threshold is based on the ₦70,000 minimum wage.
Pension Fund Administrators (PFAs) have been directed to:
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Use the ₦70,000 minimum wage as the benchmark for processing retirement benefits.
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Allow retirees with pensions below ₦23,333.33 per month (one-third of the minimum wage) to either withdraw their RSA balances in full or continue with the existing pension structure until the Minimum Pension Guarantee is approved.
For retirees choosing to withdraw their RSA balances in full, PFAs must submit the following to PENCOM for approval:
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A consent form confirming the retiree was fully informed about the Minimum Pension Guarantee and opted for full withdrawal.
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A signed, hard-copy application letter from the retiree requesting the withdrawal.
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A payment schedule using the template provided in the circular.
The directive mandates PFAs to ensure full compliance, with the circular taking immediate effect.
This policy provides relief for low-income earners, granting them greater access to their retirement funds in alignment with the updated wage structure.
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