Pension
PenCom Allows Low-Earning Pensioners to Withdraw Full Retirement Savings Amid New Minimum Wage
Low-earning pensioners are now allowed to withdraw their entire retirement savings or continue receiving their monthly pension, pending approval of the minimum pension guarantee.
This was confirmed in a memo sent out by the National Pension Commission (PenCom), signed by A.M. Salem, Head of the Surveillance Department of PenCom.
The memo, issued on Monday, July 29, 2024, explained that the decision followed the new Section 4.1(g) of the revised regulation on the administration of retirement and terminal benefits in light of the new national minimum wage of N70,000.
Before this announcement, retirees were only allowed to withdraw one-third of their total retirement savings.
The memo further explained that the commission took note of the new minimum wage, which was announced by President Bola Tinubu on July 29, 2024.
“Accordingly, the new National Minimum Wage Act increased the National Minimum Wage from N30,000 to N70,000.
“Section 4.1(g) of the Revised Regulation on the Administration of Retirement and Terminal Benefits (the Regulation) states that if the Retirement Savings Account (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.
“Consequently, Pension Fund Administrators are directed to apply N70,000 as the current National Minimum Wage in processing retirement benefits in accordance with the provisions of Section 4.1(g) of the Regulation.
“Retirees whose monthly/quarterly pensions are less than N23,333.33 (one-third of the current minimum wage of N70,000) will 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.”
Also, the memo included instructions for retirees who opt for the withdrawal option. Requests for payments should be forwarded to the commission with the following documents:
- A consent form confirming that the Pension Fund Administrator (PFA) properly informed the retiree about the Minimum Pension Guarantee and that they chose to receive the outstanding balance in the RSA en bloc.
- A signed hard-copy application letter (not an electronic signature) requesting the withdrawal of the outstanding balance in the RSA.
- The payment schedule, attached as Appendix 1.
The memo emphasized that all necessary measures should be taken to ensure full compliance with this directive, which takes immediate effect.