Workers can now enjoy 50% lump sum payment on retirement

Workers under the Contributory Pension Scheme (CPS) can now access up to 50 percent maximum lump sum upon retirement as long as they have sufficient balance in the retirement savings Account (RSA)

The industry regulator – the National Pension Commission (PenCom), gave the go-ahead directive in a Guidance Note on the Revised Programmed Withdrawal Template Version 2, sent to Pension Fund Administrators (PFAs)

PenCom stated that retirees can now enjoy a lump sum from the balance standing to the credit of their Retirement Savings Account (RSA), provided that the amount left after that the lump sum withdrawal shall be sufficient to procure an annuity or fund-programmed withdrawal that will procure an amount not less than 50 percent of their annual remuneration as at the date of retirement.

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It said the revised programmed withdrawal template also removed the retirement age limitation and now accepts 65 years and above to accommodate the broader categories of retirees in the different sectors of the economy.

PenCom submitted that the new rule applies only to employees who retire under the Contributory Pension Scheme (CPS) and are yet to be programmed as of the release date of the revised programmed withdrawal template version 2.

It said it also covers retirees who choose the programmed withdrawal as their preferred mode of retirement benefit payment or Retiree Life Annuity (RLA) option at retirement as at the release date of the programmed withdrawal template version 2.

PenCom stated that the guidance note seeks to provide PFAs with a standard procedure for calculating retirement benefits such as lump sum, monthly/quarterly pensions and pension arrears, using age, gender, final salary, the RSA balance, pension arrears and the A55 adjusted mortality table for eligible retirees.