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324,141 Disengaged Workers Withdraw N113bn From Pension Funds

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As agencies and companies in both the public and private sectors continue to reduce the workforce to cut costs, about 324,141 disengaged employees have withdrawn N113.2 billion from the N9.3 trillion pension assets as at June 2019.

LEADERSHIP learnt that the continuous sacking of workers majorly in the private sector had forced them to resort to their pension contributions by accessing 25 per cent of their savings.

The harsh economy is alleged to be having ripple effects on firms and the labour market.

The Pension Reforms Act (PRA) 2014 allows contributors, under the age of 50 years, who were disengaged and were unable to secure another job within four months of their sack, to access 25 per cent of the money in their Retirement Savings Accounts (RSAs).

A recent document sourced from the National Pension Commission (PenCom) showed that private sector accounted for 308,993 of the disengaged workers who were able to access N107.9 billion from their pension contributions.

The public sector accounted for the remaining 15,148 workers, of which federal government sacked 8,361 members of staff while the states disengaged 6,787 workers, who accessed N5.3 billion during the period.

In the second quarter of the year (April to June), 2019, 10,673 workers who were disengaged from their jobs withdrew N5.2 billion from the pension funds

A breakdown of the figure revealed that private sector accounted for 10,006 of the disengaged workers while the public sector had the remaining 666 employees, of which federal government sacked 192 while the states sacked 475 workers during the period.

According to PenCom, “approval was granted for the payment of N5.28 billion to 10,673 RSA holders who were under the age of 50 years and were disengaged from work and unable to secure another job within four months of disengagement in the second quarter of the year.

“The cumulative total number of RSA holders who were paid benefits for temporary loss of job was 324,141 and were paid a total of N113.21 billion being 25 per cent of the balances of their RSAs as prescribed by the Pension Reform Act 2014.

“A further analysis showed that the private sector accounted for 95.33 per cent of those who benefitted from these payments while the public sector accounted for 4.67 per cent.”

While some firms in both the public and private sectors had downsized, some are preparing to lay-off more workers in the current year in a bid to cut their expenditures, meaning that, more workers will be disengaged, hence, more pension contributors will demand for 25 per cent of their RSA balance in the current year.

Some of the beneficiaries, industry sources disclosed, invested the money in their business ideas in a bid to be self-employed, while some used it to meet their immediate financial needs. 

The increase in the number of people accessing their pension funds as a result of job loss, according to market observers, was due to the harsh economic reality in the country.

The managing director of NPF Pensions Limited, Mr. Hamza Sule Wuro Bokki, had in April 2019 said that the 25 per cent withdrawal does not deplete the pension assets because of the continuous growth in the fund.

He said that the gesture is a temporary measure given to RSA holders to assist them financially during their trying period, noting that as soon as they get a new employment, they continue to remit their savings.

With new contributors joining the new pension scheme on a daily basis as well as the income emanating from the investment of pension assets, he stressed that the pension fund was not under any threat, noting that what was being withdrawn was a small fraction compared to what comes into the pension pool.

Meanwhile, the acting director-general of PenCom, Mrs. Aisha Dahir-Umar, has said that the commission would not relent in its efforts to deepen pension coverage in the country to mobilise enough savings for economic growth and development.

Stating that the pension fund was not only giving good returns on investment to contributors, she promised that PenCom would continue to roll out policies to further secure and protect the N9.3 trillion pension assets and urged the contributors to calm their nerves as their savings were in good hands.

Since the inception of the Contributory Pension Scheme (CPS) in 2004, she said that the agency has not witnessed any financial mismanagement because the management structure of the fund between PenCom, Pension Fund Administrators(PFAs), and Pension Fund Custodians(PFCs) does not give room for financial malpractices and embezzlement.

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