Low-earning pensioners are now allowed to access their entire retirement savings as a lump sum or continue receiving their monthly pension, pending approval of the Minimum Pension Guarantee. This update was announced in a memo issued by the National Pension Commission (PenCom) on November 27, 2024.
The memo, signed by A.M. Salem, Head of the Surveillance Department at PenCom, stated that the change follows the introduction of Section 4.1(g) in the revised regulation governing retirement and terminal benefits. The regulation now aligns with the recent increase in the national minimum wage to N70,000, signed into law by President Bola Tinubu on July 29, 2024.
Under previous regulations, retirees were only allowed to withdraw one-third of their total Retirement Savings Accounts (RSAs). However, the revised rule permits pensioners whose monthly or quarterly pensions fall below N23,333.33 (one-third of the current minimum wage) to choose between receiving the full balance of their RSA or continuing with their existing pension payments, until the Minimum Pension Guarantee is implemented.
The memo, addressed to pension fund administrators and custodians, emphasized that retirees opting for the lump-sum payment must submit certain documentation for approval. These documents include a consent form confirming that the retiree was properly informed about the Minimum Pension Guarantee, a signed application letter, and a payment schedule.
PenCom has urged all pension fund administrators to comply with the new guidelines immediately, ensuring that retirees have the option to either withdraw their full balance or continue with their current pension, depending on their preference.