Understanding PenCom’s New Guidelines on Foreign Currency Pension Contributions

The National Pension Commission (PenCom) has introduced new Guidelines on Foreign Currency Pension Contributions, to provide clarity and opportunities for Retirement Savings Account (RSA) holders who earn or remit pensions in foreign currency.

This development is especially important for Nigerians in the diaspora and those working with international organisations or foreign companies in Nigeria who receive part or all of their earnings in foreign currency.

Why the New Guidelines Matter
The guidelines are designed to:

• Expand pension coverage to Nigerians abroad and workers earning in foreign currency.
• Provide a secure, transparent system for making contributions in US Dollars (USD).
• Diversify pension fund inflows and strengthen investment opportunities.
• Ensure compliance with both Nigerian regulations and international standards.

Who Can Contribute?

• Eligible contributors include:
• Nigerians living and working abroad.
• Nigerians and foreigners in Nigeria employed by foreign organisations or international institutions who earn in foreign currency.

How Contributions Work

• Contributions must be made in USD.
• Contributors must open an RSA with a Pension Fund Administrator (PFA).
• Payments can be made daily, weekly, or monthly.
• Contributions are split into two parts: 60% – accessible (with certain conditions and 40% – preserved for retirement.
• Contributions must stay in the RSA for at least six months before any withdrawal.
• Nigerians abroad will contribute through a Non-Resident Nigerian Ordinary Account (NRNOA), while those in Nigeria will use domiciliary accounts.

Investment of Contributions
PenCom allows PFAs to invest foreign currency contributions in safe and regulated instruments, including:

• Foreign currency-denominated FGN securities, Eurobonds, and money market instruments.
• Supranational bonds, ETFs, REITs, private equity, and infrastructure funds.
• Hedged naira-denominated investments where necessary.
• All investments must meet strict quality and risk management requirements, ensuring safety and fair returns.

Accessing Your Pension Benefits

• Contributors can access benefits at age 50 or on health grounds.
• Benefits can be received in USD (via lump sum or programmed withdrawals) or in Naira if preferred.
• Before retirement, contributors can withdraw twice a year, but only after the initial six-month holding period.
• If a person joins the scheme after age 50, they may withdraw all contributions anytime, subject to notice.

Tax Rules

• Withdrawals made within five years of contribution are subject to tax.
• Withdrawals after five years are tax-free.
• Pension Fund Custodians must remit any applicable taxes to the relevant authority.

What This Means for RSA Holders

This initiative creates a structured pathway for Nigerians abroad and those earning in foreign currency to participate in the Contributory Pension Scheme (CPS). It safeguards their retirement savings while offering flexibility, transparency, and global-standard investment options.

For eligible RSA holders, this is an opportunity to secure retirement savings in hard currency, diversify investments, and enjoy the protection of PenCom’s regulatory framework.

✅ Takeaway:
If you are a Nigerian living abroad or working for a foreign organisation in Nigeria, you can now contribute to your RSA in US Dollars and enjoy transparent, secure, and flexible pension management under the new PenCom guidelines.

#Stronger Pensions Stronger Nigeria
#Pension Revolution2.0

Be the First to Know – Follow PensionNigeria WhatsApp Channel Its Free – Click here to follow our WhatsApp Channel

Support PensionNigeria

Support PensionNigeria financially with N1,000 per Month HERE, or with any amount ONCE (One Time Only) HERE
Empower us to do more independent analysis of the Pension Industry in Nigeria

Be the First to Know – Follow PensionNigeria WhatsApp Channel
Its Free – Click here to follow our WhatsApp Channel

Don’t Miss Anything Subscribe to PensionNigeria Newsletter on Substack

Once you Subscribe, we immediately send you an Email.
Please check your Inbox and SPAM folder.
If the Email is in your SPAM folder, kindly move it to your Inbox and add pensionnigeria@substack.com to your address book or contacts.
If you have subscribed before and you still do not receive our Newsletter,
please check your “Spam Folder”, if you find our Newsletter there, mark it as “NOT SPAM” or move it to your Inbox

Check here for Recent PensionNigeria Newsletter

Follow PensionNigeria on Social Media

Like our Facebook Page
Follow us on Twitter, Instagram & LinkedIn
Subscribe to our Channel on YouTube

Grow Your Personal Investment with Stanbic IBTC Asset Management

Pension is Your Right,
An Insurance for Old Age
Follow PensionNigeria on Social Media LinkedIn Twitter Instagram Facebook YouTube