The National Pension Commission (PenCom) has announced that low-earning pensioners are now allowed to withdraw their entire retirement savings in one lump sum or continue receiving their monthly pension, pending the approval of the Minimum Pension Guarantee.
A memo, dated November 27, 2024, and signed by A.M. Salem, the Head of PenCom’s Surveillance Department, stated that this change follows the new Section 4.1(g) of the revised regulation on the administration of retirement and terminal benefits, in line with the new minimum wage of N70,000.
Prior to this announcement, retirees were allowed to withdraw only one-third of their total RSAs.
The memo which was addressed to pension fund administrators and custodians said, “The commission has noted that President Bola Tinubu had on Monday, 29 July 2024, signed the National Minimum Wage Bill into law.
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“Accordingly, the new National Minimum Wage Act increased the National Minimum Wage from N30,000.00 to N70,000.00.
“Section 4.1 (g) of the Revised Regulation on the Administration of the Retirement and Terminal Benefits (the Regulation) provides that where the Retirement Savings Account balance cannot provide a monthly/quarterly pension or annuity of at least one-third of the prevailing minimum wage, the retiree shall be allowed to take the entire balance in the RSA en bloc.
“Consequent to the above, Pension Fund Administrators are hereby directed as follows; To apply N70,000.00 being the current National Minimum Wage in processing of retirement benefits in line with the provisions of Section 4.1 (g) of the Regulation.
“Retirees whose monthly/quarterly pensions are less than N23,333.33, representing one-third of the current minimum wage of N70,000.00, be allowed to choose between receiving the outstanding balance in their RSAs en bloc or continuing to receive their current monthly/quarterly pensions pending the commencement of the Minimum Pension Guarantee.”
The memo stated that requests for payments from retirees opting to withdraw the outstanding balance in their RSAs as a lump sum should be submitted to the commission, along with the required documents listed below, for consideration and
The documents include “A consent form reflecting that the PFA properly enlightened the retiree on the Minimum Pension Guarantee and that he/she chose to receive the outstanding balance in the RSA en bloc.
“A hard copy application letter (not an electronic signature) signed by the retiree to withdraw the outstanding balance in the RSA.
“The payment schedule in the template is attached as Appendix 1. You are therefore required to take all necessary measures to ensure full compliance with this circular. This circular takes immediate effect.”
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