The National Pension Commission (PenCom) has introduced a new policy that grants Pension Fund Administrators (PFAs) full authority to approve and process various categories of retirement benefits, eliminating the need for prior approval from the Commission.
This significant change, which will take effect on June 1, 2025, aims to streamline the pension payment process and reduce bureaucratic delays within Nigeria’s Contributory Pension Scheme (CPS).
Under the previous system, PFAs were required to seek PenCom’s “No Objection” before disbursing funds to Retirement Savings Account (RSA) holders.
The new directive now allows PFAs to handle the approval and processing of key benefits, such as programmed withdrawals, retiree life annuities, benefits for temporarily unemployed individuals, and refunds for those exempted from the CPS.
This shift is expected to speed up pension benefit processing, as PFAs will now be required to approve and complete payment instructions within two working days of receiving the necessary documentation. Once approved, the Pension Fund Custodians (PFCs) will be instructed to credit beneficiaries’ accounts within 24 hours, ensuring a more efficient process.
These payment instructions will be communicated through the Commission’s Shared Folders system, ensuring smooth coordination between PFAs and PFCs.
While the new autonomy applies to most retirement benefit approvals, there are still some categories, such as depleted RSAs and death benefits, that will require PenCom’s direct approval, as stipulated by the Pension Reform Act (PRA) 2014.
To support the implementation of this reform, PenCom has made key amendments to several regulatory instruments that govern retirement benefits administration.
The Revised Regulation on the Administration of Retirement and Terminal Benefits removes the previous requirement for PFAs to submit benefit approvals to PenCom.
Additionally, the Guidelines on Voluntary Contributions have been adjusted to allow PFAs to process withdrawals without forwarding requests to the Commission.
The Guidelines on Accessing RSA Balances for Residential Mortgages have also been modified, enabling PFAs to approve equity contributions for homeownership without PenCom’s intervention.
Other modifications to the Framework on Additional Benefits for Existing Retirees and the Framework on Pension Enhancement for Retirees on Programmed Withdrawal now allow PFAs to process pension enhancements and additional benefits requests independently.
For RSA holders, the new directive promises a faster and more seamless experience when accessing their retirement funds. Beneficiaries will no longer face delays while waiting for PenCom’s approval, significantly improving service efficiency.
The policy shift also benefits pension contributors who seek to withdraw voluntary contributions or make equity payments for mortgages.
