Low-earning pensioners can withdraw entire retirement savings, says PenCom

The National Pension Commission (PenCom) says low-earning pensioners can withdraw their entire retirement savings.

PenCom announced the adjustment in the retirement savings account (RSAs) policy in a memo dated November 27, 2024, signed by A.M. Saleem, head of the surveillance department, and directed to the chief executive officers (CEOs) of licenced pension fund administrators (PFAs) and custodians.

In the memo titled “Implementation of Section 4.1 (g) of the Revised Regulation on the Administration of Retirement and Terminal Benefits in Line with the New National Minimum Wage of N70,000.00,” PenCom directed all PFAs to apply the new minimum wage in processing retirement benefits.

The commission said retirees receiving monthly or quarterly pensions below N23,333 or one-third of the minimum wage can either withdraw the remaining balance in their retirement savings account (RSAs) or continue receiving their current pensions until the minimum pension guarantee is implemented.

“The commission has noted that President Bola Tinubu had on Monday, 29 July 2024, signed the National Minimum Wage Bill into law,” the memo reads.

“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.”

DOCUMENTS REQUIRED TO WITHDRAW ENTIRE RETIREMENT SAVINGS

The commission outlined the required procedures and documents for retirees choosing to withdraw the outstanding balance in their RSAs in full, including a signed consent form, a physical application letter, and a payment schedule.

“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,” PenCom said.

“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.”

PenCom instructed retirees to implement the necessary steps to fully comply with the directives outlined in the circular, noting that the provisions are effective immediately.