Sacked Workers Withdraw N188bn From Pension Fund Assets

The total withdrawal by disengaged workers who were pension contributors, from the N14.99 trillion pension fund assets, has grown to N188 billion as at the end of 2022, LEADERSHIP can now reveal.

The said amount was withdrawn between 2004, when the Contributory Pension Scheme (CPS) known as the new pension scheme, was established and December, 2022.

However, LEADERSHIP’s findings revealed that a sum of N26.78billion was accessed by 43,557 sacked workers last year alone, translating to about 13 percent of the N188billion total withdrawal as a result of job loss. 

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.

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A document released by the National Pension Commission (PenCom) and sighted by LEADERSHIP yesterday revealed that, in the first quarter of 2022, the commission approved N5.6billion payment to 9,517 RSA holders under the age of 50 years, who were disengaged from work and unable to secure jobs within four months. 

In the second quarter, however, the regulator approved payment of N6.6billion being 25% of their RSA balances to 9,250 RSA holders who lost their jobs within the period while a sum of N8.28 billion was granted to 11,913 RSA holders in similar circumstance in the third quarter of 2022.

However, in the last quarter of 2022, a sum of N6.3billion was granted to 12,877 RSA holders under the same category even as a total of 43,557 workers in both public and private sectors lost their jobs last year alone and were unable to get new ones within four months, which qualified them to access N26.78 billion last year. 

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.

To this end, 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.   

Responding to questions at the December, 2022 Pension Fund Operators Association of Nigeria (PenOp) media parley in Lagos, the chief executive officer (CEO) of PenOp, Oguche Agudah, had said the 25 per cent permissible withdrawal as a result of job loss, is one of the beauties of the new pension scheme, stating that, pension fund operators are aware that more contributors are taking advantage of this window to access a portion of their pension savings as awareness improves.

He disclosed that, 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 stated 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.

Aside the ability to access 25 per cent from their pension savings during job loss, he added that, the industry has also granted permission for contributors to use their RSA balance as mortgage finance, among other initiatives to make the new pension scheme attractive to Nigerian workers in public and private sectors while micro pension scheme has equally been introduced by PenCom to cater for the informal and semi-formal segment of the society.