In a significant 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.
PENCOM’s decision comes in response to concerns that many retirees are struggling to make ends meet due to the inadequacy of their pension payments, especially after the increase in the minimum wage. By permitting a full withdrawal of the RSA balance, the commission is providing a crucial option for pensioners facing financial hardship.
Pensioners React to the Change
The new policy has been welcomed by many pensioners, especially those whose savings were not enough to provide a sufficient monthly pension. For retirees living on small pension amounts, the option to withdraw the full balance offers a lifeline and more financial autonomy in retirement.
