Dollar pension opens to diaspora Nigerians, foreigners

The federal government has introduced a new pension scheme for diaspora Nigerians and foreigners, enabling them to contribute and build retirement savings from outside the country.

The scheme also covers Nigerians and expatriates working in Nigeria who earn all or part of their income in foreign currency.

In line with this, the National Pension Commission (PenCom) has issued guidelines for the scheme under its PensionRevolution2.0, aimed at reforming the pension scheme and increasing dollar earnings inflows.

Omolola Oloworaran, director general, PenCom, who announced this in her X handle, said PenCom is embarking on a roll-out of new regulations and initiatives, setting higher standards across critical pillars of the pension endeavour.

She said, “The FCY Pension Contributions Guidelines provides a pension arrangement under the Contributory Pension Scheme (CPS), for Nigerians living and working abroad and Nigerian/foreign workers working in Nigeria but earning all or part of their remuneration in foreign currency.”

According to her, the pension contributions by diaspora Nigerians and other eligible persons are to be made in dollar, while contributors will also access their benefits in dollar – except they elect to do otherwise.

“The FCY Pension Contributions Guidelines, which are now being issued for the first time, mark a watershed moment for the CPS coverage expansion and financial inclusion drive. It is a bold reform which shows that PenCom cares about the retirement security of all working Nigerians,” the DG said.

This new framework empowers Licensed Pension Fund Operators (LPFOs) to accept, manage, and invest foreign currency (FCY) contributions under the CPS.

Issued pursuant to National Pension Commission (PenCom) under the Pension Reform Act 2014, it is designed to deepen CPS participation, particularly by Nigerians in the diaspora and other eligible contributors, while safeguarding the integrity and transparency of the pension system.

The provisions cover scope, eligibility, operational requirements, and governance standards for FCY contributions, aligning with global best practices on foreign currency pension administration, while ensuring robust risk management, accountability, and effective oversight.

Part of the objectives of this guideline are to expand access to the CPS for Nigerians earning in foreign currency, including those living abroad, providing a secure and transparent mechanism for making and managing FCY contributions.

The scheme will also strengthen the investment potential of pension funds through diversified currency inflows, while ensuring compliance with local regulatory requirements and international standards.

On mode of contributions, the guidelines said contributors must open Retirement Savings Accounts (RSAs) with chosen Pension Fund Administrators (PFAs) and can make daily, weekly, or monthly pension contributions at a frequency that aligns with their earning structure.

The contributions section of the RSA statement shall be divided into two. Sixty percent shall be the contingent, available for withdrawal, while 40 percent shall only be withdrawn at retirement/

Contributions will be kept in the RSAs for a minimum of six months before withdrawal, while RSA contributors living in diaspora shall open a Non-Resident Nigerian Ordinary Account (NRNOA), in line with the Central Bank of Nigeria (CBN) requirements. They shall remit pension contributions from their NRNOA to the foreign currency collection accounts of the PFA.

Also, RSA contributors resident in Nigeria shall open domiciliary accounts (DA) with the collecting bank of the Pension Fund Custodian (PFC) appointed by the PFA and shall remit pension contributions from their DAs to the foreign currency collection account of the PFA domiciled in the PFC.

Contributors shall also indicate their Personal Identification Number (PIN) in all transfer instructions regarding the remittance of contributions.

The collecting bank of the PFC shall not charge any fee on foreign currency contributions.

Notwithstanding the provisions of 5.1(b) above, contributors who receive salaries in currencies other than the USD are eligible to contribute. However, they will be required to remit their contributions in USD, the guidelines said.