Pensioners hard hit as inflation erodes monthly pay
Pensioners are among the hardest hit by the high inflation rate in Nigeria as soaring prices of goods and services are eating into their fixed monthly pay.
Pensioners who spoke to BusinessDay said the value of their monthly pension incomes has gone down by over 400 percent in the last seven years without any increment.
The country’s inflation rate accelerated to 17.71 percent in May 2022 from 16.82 percent a month earlier, while food inflation jumped to 18.37 percent from 17.2 percent, according to the National Bureau of Statistics.
The pensioners said the hikes in the prices of food items had taken a toll on their purchasing power.
Henry Obah, who retired about seven years ago, is thanking God that he was able to build his own house where he currently lives with his wife and managing their little pensions amid high inflation.
“Life is literally unbearable for pensioners like me whose monthly pension has been fixed since retirement seven years ago,” he said.
According to him, rising inflation has made nonsense of the purchasing power of the pension.
“Costs of staples like bread have become unbearably high. From N200 per loaf of bread when I retired seven years go to now between N600 and N800 a loaf. To make matters worse, the bakers have been reducing the quality and quantity of bread, ostensibly to maximise profit. This to me is like double jeopardy, higher prices, reduced quality and quantity,” he said.
According to Obah, many pensioners like him now resort to borrowing just one week after receipt of the monthly pension.
He expressed worry that mounting debts may lead to high blood pressure and death, especially for those who do not have supportive children or relations.
“Some of us have resorted to selling our valuable assets to keep afloat,” Obah lamented. “Thank God, I was able to build a house where my wife and I currently live in. Otherwise, the thought of paying the prevailing high rent is enough to cause a heart attack.”
He therefore called on the government to consider ameliorating the plight of pensioners by putting in place some relief packages.
“We only hear about the social welfare packages such as the conditional cash transfer on television. We want pensioners to be brought within such social welfare nets,” he said.
Patrick Onwunali, another pensioner, lamenting the bad situation in the economy.
“There is no hope in the horizon; I can’t see any light at the end of the tunnel. This is because the government is not in a position to increase pensions. It is not even adequately meeting its obligations in that regard,” he said.
Onwunali said for retirees under the Contributory Pension Scheme (CPS), the industry’s return on investment is also being wiped off in real terms by inflation.
He said: “So, we’re not expecting any increase in programmed withdrawal. We are living dangerously considering the state of the economy.
“Life is becoming unbearable as there has not been any increase in pension in the recent past. Prices of necessities have skyrocketed out of reach of common citizens in a country where social welfare is virtually non-existent. The situation is really bad.”
Pius Apere, chairman/CEO of Achor Actuarial Services Limited, said the major challenges facing retirees under the CPS after about 18 years of its introduction are ensuring that they receive their benefits as and when due and their inability to have adequate retirement income to live decent life at old age.
Apere, who is also an actuarial scientist and chartered insurer, said there is an urgent need to bridge the existing gap between the exponential growth in assets under management (AUM), leading to huge dividend incomes being paid to shareholders of pension fund administrators (PFAs), and the poor economic well-being of the generality of Retirement Savings Account (RSA) holders, and the inadequate retirement income for retirees under the CPS.
He said as the regulatory capital base (shareholders fund) and AUM have increased to N5 billion and N14 trillion, respectively, there is need to revisit the investment returns and expenses allocation structure between the PFAs and RSA holders in order to ensure that the retirees’ expectations are met.
“In other words, a much higher percentage of the return on investment in pension assets must be allocated to RSA holders to cushion the effect of their retirement benefits being eroded by inflation,” Apere said.
In the UK, low-income pensioners will now get easier access to free television, as a new measure to stop those over-75 years from obtaining paperwork to get a free TV licence.
The move already laid in the UK parliament will mean pensioners struggling with the cost of living receive savings with less hassle.
The legislative change will ease the administrative burden put on over-75s, when applying for a free licence, and they have been asked to obtain and share documentation with the BBC to prove they are in receipt of Pension Credit.
As the global cost of living continues to rise due to the economic impact of the pandemic and the war in Ukraine, this measure will support eligible pensioners struggling to keep on top of their bills to claim the £159 annual saving more quickly and with less hassle.