The National Pension Commission (PenCom) has issued a new directive requiring all Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) to report any foreign currency contributions exceeding $10,000 to the Nigeria Financial Intelligence Unit (NFIU) within 24 hours.

This mandate is part of the new Guidelines on Foreign Currency Pension Contributions, issued in September 2025, which aims to allow Nigerians abroad and residents earning in foreign currency to participate in the Contributory Pension Scheme (CPS) while preventing the system from being used for illicit financial activities.

Key Requirements Under the New Guidelines

  • Mandatory Reporting: PFAs and PFCs must comply with the Money Laundering (Prevention and Prohibition) Act 2022. Any single contribution over $10,000 must be immediately reported to the NFIU, including details of the sender, their address, the amount, and the purpose of the transfer.
  • Suspicious Activity: Even contributions below the $10,000 threshold that are deemed suspicious must be flagged to the NFIU in accordance with the Financial Intelligence Unit Act 2018.
  • Dollar-Only Contributions: All foreign contributions to the scheme must be made in U.S. dollars. Nigerians in the diaspora are to use Non-Resident Nigerian Ordinary Accounts (NRNOAs), while resident contributors must use their domiciliary accounts.
  • Withdrawal Rules: A new savings split has been introduced: 60% can be accessed before retirement under limited conditions, while 40% is preserved strictly for retirement. Withdrawals are only permitted six months after the initial deposit and are limited to twice a year before retirement.

Managing the New Dollar Fund

All foreign currency contributions will be held in a dedicated Dollar Fund managed by PFAs. These funds are to be primarily invested in dollar-denominated assets, such as Eurobonds, supranational bonds, and FGN-backed securities. While investments in naira assets are allowed, PFAs must use hedging instruments approved by the Central Bank of Nigeria to manage currency risks.

The new rules also confirm that contributions and investment returns are tax-free if held for at least five years. However, early withdrawals will incur applicable taxes, which must be remitted to the relevant authorities within 21 days.

This directive is crucial for combating money laundering and terrorist financing, bringing Nigeria’s pension system in line with global compliance standards, and providing a structured, secure way for Nigerians in the diaspora to save for retirement in hard currency.