Low-earning pensioners are now allowed to withdraw their entire retirement savings in a lump sum or continue receiving their monthly pension until the Minimum Pension Guarantee is approved. This was announced in a memo from the National Pension Commission (PENCOM), signed by A.M. Salem, Head of the Surveillance Department.
The memo, dated November 27, 2024, states that the new provision follows the updated Section 4.1 (g) of the revised regulation on retirement and terminal benefits, which aligns with the recent increase in the national minimum wage to N70,000.
Previously, retirees could only withdraw one-third of their total Retirement Savings Accounts (RSAs). The memo, addressed to pension fund administrators and custodians, explained that the change came after President Bola Tinubu signed the National Minimum Wage Bill into law on July 29, 2024. As a result, the National Minimum Wage was raised from N30,000 to N70,000.
Section 4.1 (g) of the revised regulations stipulates that if a retiree’s RSA balance cannot provide a monthly or quarterly pension of at least one-third of the minimum wage (N23,333.33), the retiree is now entitled to withdraw the full balance. Accordingly, pension fund administrators are instructed to apply the new N70,000 minimum wage when processing retirement benefits.
Retirees whose monthly or quarterly pensions fall below N23,333.33 can choose between withdrawing the full balance from their RSAs or continuing to receive their pension until the Minimum Pension Guarantee is implemented. Pension fund administrators are directed to submit the necessary documents for retirees opting for a lump-sum withdrawal, including a consent form confirming the retiree’s understanding of the Minimum Pension Guarantee, a signed application letter, and a payment schedule.
The circular takes immediate effect, and full compliance is required.
