The National Pension Commission has clarified that low-earning pensioners can now withdraw their total retirement savings at once or opt to continue receiving monthly pensions while awaiting the implementation of the Minimum Pension Guarantee.
This directive was outlined in a memo signed by the Head of PenCom’s Surveillance Department, A. M., Salam.
PenCom, in a memo dated November 27, 2024, in Abuja, revealed that low-earning pensioners can withdraw their total retirement savings en bloc or continue receiving monthly pensions. This update aligns with section 4.1 (g) of the revised regulation on administering retirement and terminal benefits, reflecting the new minimum wage of ₦70,000.
Previously, retirees were restricted to withdrawing only one-third of their total Retirement Savings Accounts (RSAs) as a lump sum, with the remainder used for programmed withdrawals or annuities.
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.
“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 from the National Pension Commission (PenCom) stated that requests for payments to retirees opting to withdraw their outstanding RSA balance en bloc must be submitted to the commission with the required supporting documents.
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.”
