In a bold step to enhance efficiency and improve service delivery, the National Pension Commission (PenCom) has unveiled a significant revamp of its approval process for retirement benefit payments. Starting June 1, 2025, Pension Fund Administrators (PFAs) will no longer need to get prior approval from the Commission to process and disburse a wide array of retirement benefits to holders of Retirement Savings Accounts (RSAs).
This new directive, detailed in a circular released on March 12, 2025, is part of PenCom’s ongoing mission to streamline operations and cut down on bureaucratic delays in managing retirement benefits under Nigeria’s Contributory Pension Scheme (CPS). The circular, signed by A. M. Saleem, the Head of the Surveillance Department at PenCom, gives PFAs the power to independently handle and approve benefit payments, a responsibility that previously required oversight from the Commission.
Key Changes in the Approval Process
Under the new guidelines, PFAs will now have the authority to process and approve a variety of benefit payments without seeking prior approval from PenCom. These include:
- Programmed Withdrawals
- Retire Life Annuities
- Access to Benefits upon Temporary Loss of Employment
- En Bloc Payments for retirees whose RSA balances cannot provide a reasonable pension
- Pre-Pension Reform Act Benefits Payments for private sector retirees
- Voluntary Contributions
- Payments towards Residential Mortgage Equity Contributions
- NSITF Contributions for retirees whose contributions were transferred to their RSAs
- Changes in Pension Payment Periodicity
- Resolution of Errors from employers’ remittances
- Refunds to persons exempted from the CPS
The circular mandates that PFAs complete the processing, approval and payment of these requests within two working days after the necessary documentation is completed. Pension Fund Custodians (PFCs) are also required to effect payments into beneficiaries’ accounts within 24 hours of receiving instructions from the PFAs.
Exemptions and Continued Oversight
While the new directive grants PFAs greater autonomy, certain benefit applications will still require Commission approval. These include requests related to depleted RSAs and death benefit applications, as stipulated under Section 8 (2) of the Pension Reform Act 2014 (PRA 2014).
Regulatory Amendments
To facilitate the implementation of these changes, PenCom has approved amendments to several regulatory instruments governing benefit administration. Key amendments include:
- Revised Regulation on the Administration of Retirement and Terminal Benefits: PFAs will now process and approve retirement payments without Commission oversight.
- Guidelines on Voluntary Contributions: PFAs will independently handle withdrawal and transfer requests.
- Guidelines on Accessing RSA Balances for Residential Mortgages: PFAs will process and approve mortgage-related requests.
- Framework on Additional Benefits and Pension Enhancement: PFAs will now compute and approve additional benefits and enhanced pensions without Commission intervention.
A Step Towards Efficiency
The move is expected to significantly reduce delays in the payment of retirement benefits, a long-standing issue that has frustrated many retirees in Nigeria. By decentralizing the approval process, PenCom aims to enhance the efficiency of pension administration and ensure that retirees receive their benefits in a timely manner.
Looking Ahead
The new directive is part of PenCom’s broader strategy to modernize Nigeria’s pension system and improve service delivery to RSA holders. As the June 1 implementation date approaches, stakeholders will be closely monitoring the impact of these changes on the speed and efficiency of benefit payments.
For further inquiries, the Commission has directed all questions to the Head of the Benefits and Insurance Department.
