The National Pension Commission (PenCom) has unveiled a policy that allows Nigerians living abroad and those earning in foreign currency within Nigeria to save pensions in United States dollars.
The new framework, contained in its Guidelines on Foreign Currency Pension Contributions released in September 2025, marks a significant expansion of the Contributory Pension Scheme (CPS) and is aimed at deepening participation by the Nigerian diaspora while ensuring transparency, accountability, and compliance with global standards.
According to PenCom, the reform was issued under the powers of the Pension Reform Act (PRA) 2014. It gives Licensed Pension Fund Operators (LPFOs) the authority to accept, manage, and invest foreign currency contributions while safeguarding contributors’ funds through strict operational and governance requirements.
The guidelines specify that Nigerians living and working abroad are eligible to participate, alongside Nigerians and foreigners working in Nigeria for foreign companies or international organisations who receive part or all of their salaries in foreign currency. This ensures that workers in the diaspora and expatriates in Nigeria can now formally channel their retirement savings into the CPS without being constrained by naira-only contributions.
To qualify, contributors must present valid documentation such as a National Identification Number, an international passport, and details of next-of-kin and beneficiaries. Foreigners working in Nigeria must provide additional identification, while all contributors are required to undergo strict Know Your Customer (KYC) checks in line with anti-money laundering regulations.
All contributions must be denominated in US dollars, even for workers earning in other foreign currencies, meaning that remittances will need to be converted into dollars before being transferred. Pension Fund Administrators (PFAs) will maintain separate Retirement Savings Accounts (RSAs) for these contributors.
The rules stipulate that contributions are to be split into two segments: sixty per cent of savings can be accessed for contingent withdrawals before retirement, while forty per cent must be preserved strictly for retirement. Funds must remain in the RSA for at least six months before any withdrawal is permitted. Temporary withdrawals are allowed twice a year, provided contributors give at least two days’ notice.
For Nigerians abroad, contributions will be remitted through Non-Resident Nigerian Ordinary Accounts, while those resident in Nigeria but paid in dollars are expected to use domiciliary accounts linked to PFAs’ custodial banks. Notably, banks are prohibited from charging fees on such foreign currency transfers.
Once contributions are received, Pension Fund Custodians must notify PFAs within 24 hours, while PFAs must also inform contributors of the credit into their accounts within the same timeframe. Any contribution that cannot be credited to an RSA within 48 hours is to be returned to the originating domiciliary account immediately.
In line with Nigeria’s financial intelligence regulations, all foreign currency contributions above $10,000 must be reported to the Nigeria Financial Intelligence Unit within 24 hours. Suspicious transactions are also to be flagged in accordance with anti-money laundering and counter-terrorism financing laws.
The guidelines make clear that all administrative, management, and custodial fees for foreign currency funds will be charged according to structures approved by PenCom, ensuring transparency and consistency across PFAs.
The foreign currency contributions will be pooled into a Foreign Currency Dollar Fund to be managed by PFAs. Investments are guided by strict rules to balance safety and returns. Permissible instruments include dollar-denominated Federal Government bonds, Eurobonds, supranational bonds, and eligible Nigerian corporate bonds listed on global exchanges.
PFAs may also invest in real estate investment trusts, private equity funds, infrastructure funds, and exchange-traded funds that meet quality and disclosure requirements. While contributions will primarily remain in dollars, the guidelines allow investments in naira instruments provided the associated currency risks are hedged using Central Bank-recognised futures or swaps.
To ensure safety, concentration limits apply to all investments depending on their credit rating. For instance, a maximum of five per cent of the fund can be placed in AAA-rated corporate foreign bonds, while securities rated BBB are limited to just one per cent.
Contributors can access their retirement benefits upon turning fifty or earlier on health grounds. Withdrawals may be taken in dollars either as a lump sum or through programmed withdrawals. However, contributors may also choose to receive their retirement benefits in naira if they prefer.
Those who join the scheme after the age of fifty can access their full contributions once proper notification has been given to the PFA. Before retirement, contributors may make limited withdrawals twice a year, but only after their initial deposit has remained in the account for six months.
In terms of tax treatment, the guidelines reaffirm that pension contributions and accrued interest are generally tax-exempt. However, withdrawals made within five years of contribution will be subject to tax on any income earned, in line with Nigeria’s tax laws. Pension Fund Custodians are required to remit such taxes to the relevant authorities within 21 days of deduction.
