Concerns as dwindling economic situation eats into pension savings

The poor state of the economy has brought untold hardship on Nigerians, pushing many to survival. Those who are out of jobs are falling back on the 25 per cent out-of-job withdrawal from their pension savings to survive.

About 30,680 retirement savings account (RSA) holders who were disengaged from their jobs and unable to secure jobs within four months to obtain N20.58 billion from the N16.76 trillion pension fund assets in nine months. Some of the workers drawing from the fund voluntarily resigned from their appointments because they could not cope with the paltry monthly salaries.

According to the National Pension Commission (PenCom), the number of RSA holders has grown to 10 million since its inception. The Pension Reform Act (PRA) 2014 provides that RSA holders who lost their jobs and are unable to secure another within four months could apply for 25 per cent of contributions.

These RSA holders are made up of workers in both private and public sectors. The withdrawal took place in nine months – between January and September 2022. A total of 9.79 million contributors in both the private and public sectors of the economy have contributed to the current pension fund assets from inception.

To this, checks by The Guardian also confirmed that the private sector contributed 50.66 per cent to the pension fund assets, while the public sector compliance was put at 49.34 per cent.

According to the Act, such withdrawals shall only be made after four months of such retirement, cessation of employment, or inability to secure another employment.

The 25 per cent withdrawal from the RSA is a proactive clause enshrined in the PRA 2014 to cushion the impact of severance from employment for employees provided that they do not secure another employment within the period stipulated. Contributors are not required by the Act to state the reason(s) for leaving current employment or why they are accessing a portion of their RSA balance.

Speaking to The Guardian on whether the rising withdrawal from RSA accounts is caused by the ‘Japa’ Syndrome, PenCom’s Head of the Corporate Communications Department, Abdulqadir Dahiru, said that the industry does not specifically document or track the reason for the withdrawals.

However, he said the commission approved the payment of N20.58 billion to 30,680 RSA holders, who disengaged from work and were not able to secure new jobs within the period by law.

Dahiru maintained that the provision is to provide succour to RSA holders who are not in paid employment temporarily. He added that the number of contributors who access the 25 percent withdrawal does not necessarily equate to those who are permanently out of jobs or relocated abroad.

An industry observer, who spoke to The Guardian, under anonymity, confirmed that the “Japa” Syndrome would surely hurt the growth of pension assets in the country.

A top executive of a pension fund administrator (PFA) who does want his name mentioned said those who have migrated out of the country owing to the poor economic situation in the last few years are part of those responsible for the rising withdrawals.

Meanwhile, Nigerian workers have expressed fear of a bleak future as benefits expected after retirement might become a mirage.

They are worried because of the low compliance of their employers, in both public and private sectors of the economy, to the CPS as they refuse to remit monthly deductions into workers’ RSAs.

Many workers who engaged The Guardian complained that their employers are frustrating the efforts of the government to ensure a better retirement future for them.

PenCom’s most recent report pointed out that about 31 employers in the private sector have been compelled to pay N154.6 million for failure to remit the contributions deducted from their workers’ salaries to the appropriate PFA.

The report said 19 other defaulting employers had been recommended for appropriate legal actions.