The National Pension Commission (PenCom) has directed all Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) to report foreign currency pension contributions above $10,000 to the Nigeria Financial Intelligence Unit (NFIU) within 24 hours.
The directive is contained in the Guidelines on Foreign Currency Pension Contributions issued in September 2025.
The new framework allows Nigerians in the diaspora and residents earning in foreign currency to participate in the Contributory Pension Scheme (CPS) while tightening oversight to prevent abuse of the system.
Under the guidelines, PFAs and PFCs are required to comply with Section 3(1) of the Money Laundering (Prevention and Prohibition) Act 2022. Any contribution above $10,000 must be reported immediately, with full details including the sender’s name, address, amount, and purpose of transfer.
Suspicious contributions, even below the threshold, must also be flagged to the NFIU in line with the Financial Intelligence Unit Act 2018.
All contributions under the scheme must be made in US dollars, regardless of the contributor’s earning currency. Nigerians abroad are expected to remit funds through Non-Resident Nigerian Ordinary Accounts (NRNOAs), while contributors in Nigeria must use domiciliary accounts linked to the custodians’ collection banks.
The rules also introduce a savings split: 60% of contributions can be accessed before retirement under limited conditions, while 40% must be preserved strictly for retirement. Withdrawals can only be made six months after the initial deposit and no more than twice yearly before retirement.
Foreign currency contributions will be pooled into a dedicated Dollar Fund managed by PFAs. These funds must be invested mainly in dollar-denominated instruments such as Eurobonds, supranational bonds, FGN-backed securities, and exchange-traded funds.
While PFAs are allowed to invest in naira assets, they must hedge currency risks using Central Bank of Nigeria-approved instruments such as swaps and futures. Investments must also meet strict credit ratings and concentration limits to reduce exposure to default risk.
PenCom confirmed that contributions and returns are tax-free if held for at least five years. However, early withdrawals attract applicable taxes, which must be remitted to the relevant authorities within 21 days.
In addition, PFAs are required to send daily and monthly reports to PenCom showing contributions, withdrawals, and portfolio valuations in both US dollars and their naira equivalents.
The Nigerian Financial Intelligence Unit (NFIU) is the national centre for collecting, analysing and disseminating reports of suspicious financial transactions in Nigeria, to assist law-enforcement and regulatory agencies in combating money laundering and terrorist financing.
The mandatory reporting of $10,000+ inflows is designed to block the pension system from being used for money laundering or terrorism financing. It also brings Nigeria’s pension sector in line with global compliance standards.
For Nigerians abroad, the guidelines provide a structured way to save for retirement in hard currency. For regulators, the new rules offer tighter visibility over dollar inflows into the pension system.