Harsh Economy: Sacked Workers Withdraw N217.4bn From Pension Assets

With companies downsizing as a result of the harsh business operating environment, especially, in the last one year, 482,857 disengaged workers, mainly from the private sector, are now finding succour in their pension contributions, withdrawing N217.4 billion from the pension fund assets, LEADERSHIP can exclusively reveal.

As at December, 2023, the pension fund assets have risen to N18.3 trillion.

In the breakdown of the 3rd Quarter 2023 report of the pension industry released by the National Pension Commission (PenCom) at the weekend, further findings show that disengaged workers. have accessed N43.4 billion from their pension savings between Q3, 2022 and Q3, 2023 to sustain their livelihood pending when they will get another jobs.

Cumulatively though, between 2004 when the Contributory Pension Scheme(CPS) takes effect and the third quarter of 2023, a sum of N217.4 billion have so far been withdrawn with expectation that additional N8 billion may have been accessed in Q4, 2023, a picture that would be clearer by the time the industry regulator release the data, hence, would have taken the withdrawn money to N225 billion.

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 Retirement Savings Accounts (RSAs) balance.

The harsh business operating environment coupled with high inflation rate and low purchasing power, forex volatility, among others, have forced companies to reduce staff strength, thereby, throwing more people into the already saturated labour market.

With no hope of securing funding to sustain their livelihood during these trying times, the disengaged workers have resorted to their pension contributions by accessing 25 per cent of their pension savings.

Some of the beneficiaries, industry sources disclosed, invested their money in their business ideas in a bid to be self-employed, while some used it to meet their more immediate financial needs pending when they get a better job offer.

A document released by PenCom and sighted by LEADERSHIP revealed that, as at the end of the third quarter 2023, a total of 7,697 Retirement Savings Accounts(RSAs) holders requested to access 25% of their RSA balances due to temporary loss of employment. Out of this figure, 7,688 RSA holders’ requests were approved and were paid N8.6 billion while 9 were rejected because their ages were above 50 years.

From the 7,688 applicants whose benefits were approved, 7,242 worked in the private sector, while the remaining 446 worked in the public sector, hence, as at the end of the quarter, the cumulative money withdrawn through this window has risen to N217.4 billion.

In the second quarter of last year, 8,423 disengaged workers withdrew N7,631.28bn while in the first quarter, 2023, 13,126 workers accessed N12,717.90bn from the pension assets.

In the Q4, 2022, however, 9,966 disengaged workers got N6.3bn even as N8.28 billion was given to 11,913 RSA holders, making a cumulative 50,500 disengaged workers who benefited N43.4 billion under one year.

Reacting to this development, the chief executive officer (CEO) of Pension Fund Operators Association of Nigeria(PenOp), Oguche Agudah, confirmed that there has been an increase in the number of contributors requesting for the 25 per cent permissible withdrawal in recent times owing to more awareness about the provision and the harsh economy that is making more workers lose their jobs.

He said, operators were ever ready to accede to requests of the contributors provided they are genuine, stating that, Pension Fund Administrators (PFAs) are happy that contributors have such a window to benefit from their contributions.

Over time, operators have profitably invested the pension assets such that it is yielding good returns on investment, hence, the impact of the 25 per cent withdrawal will not be felt, he said,

He assured that pension fund administrators will continue to look for additional viable investment options permissible under the law, to grow the assets to ensure that pension contributors can get values for their investment.

Earlier, the director general, PenCom, Mrs. Aisha Dahir-Umar had assured pension contributors that their funds are secured, stating that, the commission don’t usually delay approval for the 25 per cent withdrawal since it is permissible by law.

She said, this is one of the opportunities of subscribing to the new pension scheme, urging Nigerian workers to pressure their employers to ensure that they register them under the CPS to benefit from this kind of initiative.