About 30,000 disengaged workers, basically from the private sector of the nation’s economy, have between April and June, 2020, applied for 25 per cent of the contribution in their Retirement Savings Accounts (RSAs), LEADERSHIP can exclusively reveal.
The continuous sacking and shutting down of companies majorly in the private sector, a fallout of the coronavirus pandemic that has infected over 33,000 people in the country, has made disengaged workers resort to their pension contributions by accessing part of their savings.
The Pension Reforms Act (PRA) 2014 allows contributors, under the age of 50 years, who were disengaged from work and were unable to secure another job within four months of disengagement, to access 25 per cent of their respective RSAs.
The Nigerian economy as well as the global economy have been negatively affected by the coronavirus pandemic, as companies were closing shops in their thousands, thereby, throwing millions of Nigerians into the labour market.
Similarly, the existing companies were not in a strong financial position to retain their entire workforce, hence, they had to disengage some workers to operate within their current financial means.
LEADERSHIP findings revealed that Pension Fund Administrators (PFAs) have, in the last few months, witnessed surge in the application for 25 per cent contributions, even as the National Pension Commission (PenCom), who gives final approval to such applications confirmed LEADERSHIP investigation.
While most of the applications have been granted and fund released, others are at an advanced stage of approval, while fresh applications are coming in as well.
Some of the beneficiaries, industry sources disclosed, are investing this money in their business ideas in a bid to be self-employed, while some used it to meet their more immediate financial needs.
Speaking in an exclusive interview with LEADERSHIP, the head, Corporate Communications, PenCom, Mr Peter Aghahowa, said, the commission has, because of increase in applications, strengthened the department responsible for this, attributing the increase in application to the downturn in the economy occasioned by COVID-19.
He said, the commission has already instructed PFAs to prepare for increase in the 25 per cent application as people keep losing jobs on a daily basis. He added that this development shows the beauty of the new pension scheme, promising that, the commission will not hesitate to grant any application as long as it is genuine and fulfill the needed requirements.
Stating that the pandemic has affected the Pension industry just as it has affected other sectors of the economy, he added that, the Pension asset growth could be slower in the next few months or years until the economy recovers fully.
According to him, “Yes, the rate of growth of pension asset could be slow because companies who naturally contributed on a monthly basis, are no longer in existence, meaning that, contributions from that end is no more. Even the existing ones are struggling to meet their pension obligations as and when due. Similarly, the Return on Investment of pension asset is low now, but the beauty of this is that pension fund investment is a long term, so, it can recover what it lost when the economy improves.”
Similarly, in an interview with the director, Centre for Pension Right Advocacy (CPRA), Mr Ivor Takor, such deduction will not have major impact on the entire pension asset because the pension industry has accumulated a huge savings of N10.57 trillion over the years.
Though, he expects pension contribution compliance to be slow this time as companies and individuals embark on survival first before making plans for pension savings, he believes things will change for better as soon as the threatening virus subsides in the country.
“It’s just a phase that I expect will not linger for too long. As soon as we were able suppress COVID-19, the nation’s economy will recover as well as the pension sector,” he pointed out.