The Traffic

Pension Win for Low-Income Earners: Withdraw Your Entire Savings Now, Says PENCOM”

By Achimi Muktar

In a groundbreaking move, low-earning pensioners in Nigeria can now withdraw their entire retirement savings at once, thanks to a new directive from the National Pension Commission (PENCOM). This decision comes as part of regulatory changes tied to the recently approved minimum wage of ₦70,000.

The announcement, outlined in a memo signed by A.M. Salem, Head of the Surveillance Department at PENCOM, marks a significant shift in the administration of retirement benefits. The memo, dated 27 November 2024, was addressed to pension fund administrators and custodians and has been widely celebrated by pensioners across the country.

Why the Change?

Previously, retirees could only access a third of their Retirement Savings Accounts (RSAs). However, Section 4.1 (g) of the revised regulation on retirement benefits now permits full withdrawal for retirees whose savings cannot guarantee a monthly pension of at least one-third of the current minimum wage—now ₦23,333.33.

This update follows President Bola Tinubu’s signing of the new National Minimum Wage Bill into law on 29 July 2024, raising the minimum wage from ₦30,000 to ₦70,000.

How It Works

PENCOM’s directive allows retirees who meet the criteria to choose between two options:

Withdraw the Total Savings En Bloc: Retirees can take the full balance of their RSA in one go.

Continue Monthly Pensions: Retirees can opt to maintain their current pension arrangement while awaiting the introduction of the Minimum Pension Guarantee.

To process their requests, pensioners must provide specific documentation, including:

A consent form indicating they were properly informed about their options.

A signed hard-copy application letter requesting the full withdrawal of their RSA balance.

A payment schedule prepared by their Pension Fund Administrator (PFA).

The Implications

This new directive is seen as a lifeline for low-income retirees, offering them greater flexibility in managing their funds. By addressing the financial realities of pensioners whose RSA balances fall below the sustainability threshold, PENCOM ensures that retirees are not left stranded.

What’s Next?

Pension Fund Administrators have been directed to implement these changes immediately and ensure full compliance with the circular. Retirees are advised to approach their PFAs to explore their options and make informed decisions.

The introduction of this measure underscores PENCOM’s commitment to adapting to economic realities and providing financial relief to the nation’s most vulnerable pensioners. With the new ₦70,000 minimum wage setting the benchmark, this policy ensures that retirees can access their hard-earned savings with dignity and ease.

Stay tuned as we track how this policy impacts pensioners nationwide.