Dollar Pensions: PenCom Opens Retirement Savings to Foreign Currency Contributions
Dollar Pensions: PenCom Opens Retirement Savings to Foreign Currency Contributions
The National Pension Commission (PenCom) has taken a bold step to expand Nigeria’s pension landscape with the release of its Guidelines on Foreign Currency Pension Contributions (September 2025). For the first time, Nigerians can now save for retirement directly in US dollars.
The new rules are aimed at Nigerians living abroad, workers in Nigeria who are paid in foreign currency, and even expatriates employed by international organisations. Until now, these groups had limited access to the Contributory Pension Scheme (CPS).
Under the guidelines, contributors will open Retirement Savings Accounts (RSAs) with their Pension Fund Administrators (PFAs) and make deposits in dollars. Nigerians abroad will use Non-Resident Nigerian Ordinary Accounts, while those in Nigeria will remit through domiciliary accounts. Importantly, banks are not allowed to charge fees on these contributions.
Contributors have flexibility in how they save, with options to make payments daily, weekly, or monthly. Of the total contributions, 60 percent can be accessed before retirement, while the remaining 40 percent is preserved until the contributor turns 50 or retires. Withdrawals before retirement are allowed only after six months, and limited to twice a year.
The dollars saved will not simply sit idle. PenCom has set strict investment rules requiring PFAs to channel funds into safe and profitable instruments, including government and corporate Eurobonds, supranational bonds, money market products, and specialist funds such as private equity, infrastructure, ETFs and REITs. PFAs may also invest in naira-denominated assets, provided the foreign exchange risk is hedged at all times.
At retirement, contributors can choose to receive their benefits in dollars—either as a lump sum or through programmed withdrawals. Those who prefer naira payouts will also have that option. Tax treatment follows the familiar pattern: withdrawals made after five years are tax-free, while those made earlier will be taxed in line with Nigerian laws.
Individuals aged 50 and above are also eligible to participate. Participants in this category may access their full contributions at their discretion, provided that the Pension Fund Administrator is notified at least one month prior to the intended withdrawal.
For PenCom, the move is about deepening participation in the pension system, tapping into diaspora savings, and boosting foreign currency inflows into the economy. For contributors, it represents greater flexibility, global alignment, and the peace of mind that comes with saving in the currency they earn.
