Nigerian workers can access part of their pension savings before retirement under specific PenCom rules.
Nigerian workers may access a portion of their pension savings before retirement, but only under strict conditions set by the National Pension Commission, according to a report from PUNCH. The Contributory Pension Scheme requires both employers and employees to make monthly payments into a Retirement Savings Account intended for income at retirement. However, the framework allows early withdrawal in limited circumstances, particularly when a worker loses employment and remains without a job for at least four months.
In such cases, the individual may withdraw up to 25 per cent of the balance in the RSA after presenting a formal acceptance letter of resignation or disengagement from the employer. PenCom’s Q4 2022 report stated that the commission “granted approval for the payment of N6.31 billion (being 25% of their RSA balances) to 9,966 RSA holders under the age of 50 years, who were disengaged from employment and unable to secure another job within four months.”
Beyond mandatory savings, employees may also make voluntary contributions. PenCom guidelines classify 50 per cent of such contributions as contingent and accessible for withdrawal, while the remaining half is fixed until retirement. “(50%) of every amount lodged as Voluntary Contribution shall be treated as ‘contingent’… while the balance of 50% shall be treated as ‘fixed’ until retirement date,” the guidelines stated.
Informal-sector workers under the Micro Pension Plan may withdraw up to 40 per cent of their savings after three months. Additionally, RSA holders may apply up to 25 per cent of their balance toward home-mortgage equity, though experts warn that early withdrawals can reduce future pension income.