- PENCOM will now allow low-income pensioners to fully withdraw retirement savings if their monthly pension falls below N23,333
- The policy change came after the rise in Nigeria’s National Minimum Wage to N70,000, aiming to ease retirees’ financial burden
- Pensioners welcomed the new option for full lump sum withdrawal, offering greater financial autonomy for those with insufficient pensions
In a policy change aimed at addressing the financial challenges faced by low-income pensioners, the National Pension Commission (PENCOM) has announced that retirees with insufficient savings can now withdraw the entirety of their retirement savings, or continue receiving their monthly pension payments.
This decision follows the enactment of Nigeria’s new National Minimum Wage, which has seen a significant rise in the minimum wage to N70,000.
The new regulation, which amends the guidelines on the administration of retirement and terminal benefits, allows pensioners whose savings cannot generate a pension equal to at least one-third of the national minimum wage—N23,333.33—to opt for a lump sum withdrawal of their entire Retirement Savings Account (RSA). Previously, pensioners were only allowed to withdraw one-third of their total RSA balance.
This policy shift follows the signing into law of the National Minimum Wage Bill by President Bola Tinubu on 29th July 2024, which increased the minimum wage from N30,000 to N70,000.
The implementation of the new law has highlighted the growing discrepancy between the income of active workers and the pensions received by retirees, many of whom need more funds in their RSAs to meet their basic needs.
PENCOM’s memo, issued on 27th November 2024 and signed by the Head of the Surveillance Department, A.M. Salem, states that retirees who are unable to receive at least N23,333.33 in monthly pensions will now be given the option to withdraw their remaining balance as a lump sum.
Naira devaluation pushes IOCs pension managers to increase stake in offshore instruments
Meanwhile, TheRadar earlier reported that the continued devaluation of the Naira had pushed pension managers of IOCs to increase their investments in foreign instruments.
According to Nigerian pension laws, only foreign-affiliated PFAs can invest offshore. This has led to calls from local PFAs to be allowed to invest some of their assets abroad to hedge against inflation and further naira devaluation.
