Low-income pensioners can access full retirement savings

The National Pension Commission (PenCom) has announced that low-income pensioners can now withdraw their entire retirement savings at once or continue receiving their monthly pensions while awaiting the approval of the Minimum Pension Guarantee. This change was outlined in a memo signed by A.M. Salem, the Head of the PenCom Surveillance Department, dated November 27, 2024, and sent to pension fund administrators and custodians. It states that this update aligns with the new section 4.1 (g) of the revised regulation on the retirement and terminal benefits administration, which follows the recent increase in the minimum wage to N70,000. “Section 4.1 (g) of the Revised Regulation on the Administration of the Retirement and Terminal Benefits provides that where the RSA 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,” the memo reads. Before this change, retirees could only withdraw one-third of their total Retirement Savings Accounts (RSAs).

Accessing full pension savings

The memo also noted that President Bola Tinubu had signed the National Minimum Wage Bill into law on Monday, July 29, 2024, increasing the minimum wage from N30,000 to N70,000. PenCom has directed Pension Fund Administrators to apply the new minimum wage of N70,000 when processing retirement benefits. Retirees whose monthly or quarterly pensions are less than N23,333.33, which is one-third of the current minimum wage, can choose between receiving the remaining balance in their RSAs at once or continuing to receive their current pensions until the Minimum Pension Guarantee begins. For retirees who choose to withdraw the outstanding balance in their RSAs, PenCom requires specific documents for approval. These include a consent form showing that the Pension Fund Administrator properly informed the retiree about the Minimum Pension Guarantee, a signed hard copy application letter requesting the withdrawal, and a payment schedule in the specified template. The commission has instructed all relevant parties to ensure full compliance with this circular, which takes effect immediately.