The National Pension Commission (PenCom) has announced a significant change allowing low-earning retirees to withdraw their entire Retirement Savings Account (RSA) balances en bloc.
This decision follows the revised regulation on retirement benefits in line with Nigeria’s new minimum wage of ₦70,000.
The directive was issued in a memo signed by the Head of the Surveillance Department of PenCom, A.M. Salem, dated November 27, 2024. The memo was addressed to Pension Fund Administrators (PFAs) and custodians.
Background
The announcement follows the signing of the National Minimum Wage Bill into law by President Bola Tinubu on July 29, 2024, which increased the minimum wage from ₦30,000 to ₦70,000. Previously, retirees were limited to withdrawing one-third of their RSA balances, leaving many unable to access sufficient funds.
This new measure aims to ease financial burdens on low-earning pensioners and ensure they have greater flexibility in managing their retirement savings.
Key Highlights of the Directive:
1. New Provision Under Revised Regulation:
Section 4.1 (g) of the “Revised Regulation on the Administration of Retirement and Terminal Benefits” states that retirees whose RSA balances cannot provide a monthly or quarterly pension of at least one-third of the prevailing minimum wage are now allowed to withdraw their savings en bloc.
The current threshold is ₦23,333.33, representing one-third of the new minimum wage of ₦70,000.
2. Options for Retirees:
Eligible retirees can either withdraw their RSA balances in full or continue receiving their monthly or quarterly pensions until the Minimum Pension Guarantee is approved.
3. Required Documentation for Full Withdrawals:
I) A consent form showing that the retiree has been properly informed about the Minimum Pension Guarantee and has chosen to withdraw the balance en bloc. ii) A hard copy application letter (with a physical signature) requesting withdrawal of the balance.
iii) A payment schedule using the template provided by PenCom.
4. Effective Immediately:
PFAs have been directed to implement the new guidelines and ensure compliance with the circular, which takes effect immediately.
PenCom has emphasized its commitment to improving retirees’ welfare and has instructed PFAs to prioritize the proper enlightenment of retirees on their options under the new guidelines.
Source: Punch
