Mohammed Shosanya
The National Pension Commission (PenCom) has announced that low-income pensioners can now withdraw their entire Retirement Savings Account (RSA) balance or continue receiving monthly pensions until the implementation of the Minimum Pension Guarantee.
This was conveyed in a memo signed by the Head of PenCom’s Surveillance Department, A.M. Salem,and issued to pension fund administrators and custodians,The Punch reports.
The memo,dated November 27, 2024, outlined the decision, which aligns with the new minimum wage of N70,000.
Prior to this change,retirees were only allowed to withdraw one-third of their RSA balance.
But,Section 4.1(g) of the revised regulation on retirement benefits now permits retirees whose RSA balance cannot provide at least one-third of the new minimum wage in monthly or quarterly pensions to withdraw their full savings.
The Punch quoted that the memo highlighted that President Bola Tinubu had signed the National Minimum Wage Bill into law on July 29, 2024, increasing the minimum wage from N30,000 to N70,000.
It reads:“The commission has noted that President Bola Tinubu had on Monday, 29 July 2024, signed the National Minimum Wage Bill into law.
“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.”
To process these withdrawals, as stated in the memo, PenCom requires retirees to submit specific documents, including a signed consent form indicating they were properly informed of their options and a hard copy application letter.
It stated that retirees should provide, “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.
“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.
The circular further instructed pension administrators to comply with the updated regulations immediately.
“You are therefore required to take all necessary measures to ensure full compliance with this circular. This circular takes immediate effect,” it added.
