The National Pension Commission (PenCom) has introduced a new policy enabling Nigerians abroad and those earning foreign currency in Nigeria to contribute to their pensions in US dollars.
Launched in September 2025 under the Guidelines on Foreign Currency Pension Contributions, this initiative expands the Contributory Pension Scheme (CPS) to include the Nigerian diaspora and promote transparency, accountability, and adherence to international standards.
Authorised by the Pension Reform Act (PRA) 2014, the policy allows Licensed Pension Fund Operators (LPFOs) to handle and invest foreign currency contributions while ensuring robust governance and protection of contributors’ funds. Eligible participants include Nigerians working overseas, as well as Nigerians and expatriates in Nigeria earning salaries in foreign currency from international organisations or foreign companies. This framework enables seamless integration of retirement savings into the CPS, unrestricted by naira-based contributions.
To participate, contributors must provide valid documentation, including a National Identification Number, an international passport, and details of beneficiaries or next of kin. Foreigners in Nigeria must submit additional identification, and all participants must comply with rigorous Know Your Customer (KYC) protocols to meet anti-money laundering requirements.
Contributions must be made in US dollars, requiring conversion for those earning in other currencies. Pension Fund Administrators (PFAs) will maintain dedicated Retirement Savings Accounts (RSAs) for these contributors. The policy divides savings into two portions: 60% can be withdrawn before retirement for contingent needs, while 40% is reserved exclusively for retirement. Funds must remain in the RSA for at least six months before withdrawals, which are permitted twice yearly with a minimum of two days’ notice.
Nigerians abroad will remit contributions through Non-Resident Nigerian Ordinary Accounts, while those in Nigeria earning dollars will use domiciliary accounts linked to PFAs’ custodial banks. Banks are barred from imposing fees on these transfers. Pension Fund Custodians must notify PFAs of received contributions within 24 hours, and PFAs must inform contributors accordingly. Uncredited contributions must be returned to the originating account within 48 hours.
Contributions exceeding $10,000 must be reported to the Nigerian Financial Intelligence Unit within 24 hours, with suspicious transactions flagged per anti-money laundering and counter-terrorism financing regulations. Fees for administration, management, and custody will align with PenCom-approved structures to ensure fairness.
Foreign currency contributions will be pooled into a Foreign Currency Dollar Fund managed by PFAs. Investments are restricted to secure, high-return instruments such as US dollar-denominated Federal Government bonds, Eurobonds, supranational bonds, and select Nigerian corporate bonds listed on international exchanges. PFAs may also invest in real estate investment trusts, private equity, infrastructure funds, and exchange-traded funds that meet stringent quality and disclosure standards. While contributions remain in dollars, investments in naira-based instruments are allowed if currency risks are mitigated through Central Bank-approved futures or swaps.
To ensure safety, investment limits are set based on credit ratings, with a maximum of 5% of the fund allocated to AAA-rated corporate bonds and 1% to BBB-rated securities. Contributors can access retirement benefits at age 50 or earlier for health reasons, with options for lump-sum or programmed withdrawals in dollars or naira. Those joining after age 50 can access their full savings with proper notification. Tax exemptions apply to contributions and interest, but withdrawals within five years are taxable on earned income, with taxes remitted by custodians within 21 days.
