The National Pension Commission (PenCom) has issued a new directive that grants Pension Fund Administrators (PFAs) the full authority to approve and process several categories of retirement benefits without requiring prior approval from the Commission.
This policy change, which takes effect on June 1, 2025, is aimed at streamlining pension payments and reducing bureaucratic delays in Nigeria’s Contributory Pension Scheme (CPS).
Previously, PFAs were required to seek PenCom’s “No Objection” before disbursing funds to Retirement Savings Account (RSA) holders.
However, under the new directive, PFAs can now process and approve various benefits, including programmed withdrawals, retiree life annuities, benefits for temporarily unemployed individuals, and refunds for those exempted from the CPS. This means that RSA holders seeking to access their retirement funds will experience a faster and more efficient approval process.
Faster processing and payment timelines
With the new framework in place, PFAs must process, approve, and complete payment instructions within two working days of completing the necessary documentation.
- Once approved, PFAs will instruct their appointed Pension Fund Custodians (PFCs) to credit beneficiaries’ accounts within 24 hours. Payment instructions will be forwarded through the Commission’s Shared Folders system, ensuring seamless communication between PFAs and PFCs.
- While PFAs now have full control over most retirement benefit approvals, some categories will still require PenCom’s approval. These include applications for depleted RSAs and death benefits, in accordance with Section 8(2) of the Pension Reform Act (PRA) 2014.
Regulatory amendments to support the change
To implement this reform, PenCom has made key amendments to five regulatory instruments governing benefit administration.
- The Revised Regulation on the Administration of Retirement and Terminal Benefits has been updated to remove the requirement for PFAs to submit retirement benefit approvals to PenCom.
- The Guidelines on Voluntary Contributions have also been adjusted, allowing PFAs to process withdrawals without forwarding requests to the Commission.
- In addition, the Guidelines on Accessing RSA Balances for Residential Mortgages now empower PFAs to approve equity contributions for homeownership without PenCom’s intervention.
- Further modifications have been made to the Framework on Additional Benefits for Existing Retirees and the Framework on Pension Enhancement for Retirees on Programmed Withdrawal, ensuring that PFAs can now process pension enhancements and additional benefits requests independently.
Implications for RSA holders and the pension industry
The new directive is expected to enhance service efficiency and accelerate pension benefits processing. RSA holders will no longer have to wait for PenCom’s approval before accessing funds, resulting in a more seamless experience for retirees and individuals eligible for benefits.
This policy shift also reduces administrative delays for pension contributors seeking to withdraw voluntary contributions or make equity payments towards mortgages.
By empowering PFAs to fully execute their statutory functions, PenCom is reinforcing the autonomy of pension administrators while maintaining regulatory oversight.
The directive aligns with the Commission’s broader goal of improving service delivery in Nigeria’s pension industry and ensuring retirees can access their benefits without unnecessary delays.
