Job losses force Nigerians to tap pensions for lifeline

Pension savings have become an immediate lifeline for Nigerians as rising unemployment forced more people to draw on their balances for day-to-day expenses.

This development has seen workers in both the public and private sectors who lost their jobs fall back on pension savings to survive current economic hardships.

Data from the National Pension Commission shows that at the end of the fourth quarter of 2023, a total 10,307 Retirement Savings Account (RSA) holders, otherwise called contributors, requested to access 25 percent of their balances due to temporary loss of employment.

According to the commission, out of that, 10,299 RSA holders’ requests were approved and they took away N6.51 billion.

“Out of the applicants whose benefits were approved, 9,819 were from the private sector, while the remaining 480 were from the public sector,” it said.

Corroborating the trend, data from the National Bureau of Statistics (NBS) shows that Nigeria’s unemployment rate surged to 5.0 percent in the third quarter of 2023 from 4.2 percent in the previous quarter.

According to a new methodology adopted by the NBS, the unemployment rate in Africa’s biggest economy, with more than 200 million people, fell from 5.3 percent in Q4 2022 to 4.1 percent in Q1 2023.

The Pension Reform Act 2014 says: “Where an employee voluntarily retires, disengages or is disengaged from employment as provided for under Section 16 (2) and (5) of this Act, the employee may with approval of the commission withdraw an amount of money not exceeding 25 percent of the total amount credited to his retirement savings account, provided that such withdrawal shall only be made after four months of such retirement or cessation of employment and the employee does not secure another employment.”

It says where an employee has accessed the amount standing in his retirement savings account pursuant to subsection (2) of this section, such employee shall subsequently access the balance in retirement savings account only at the time of retirement.

Agudah Oguche, chief executive officer of Pension Fund Operators Association, while commenting on disbursement of death benefits to dependants of bereaved workers over a five-year period, said the Contributory Pension Scheme (CPS) has successful reflected commitment of both the increasing number of beneficiaries and providing financial support to those who are entitled to it during critical times.

He said the CPS, introduced by the Pension Reform Act 2004 and revised in 2014, recognises the importance of the contributors, the contributions, and what happens them while in employment.

“This is both when there is life and in death. With this realisation that there is life and there is also death, the operators ensure that people’s wishes are supported as far as is within the provisions of the law.”

Julius Obah, who worked in an advertising firm, lost his job in December 2020 when many companies were retrenching workers following the impact of the COVID-19 and increasing uncertainties in the economy.

Having approached his pension fund administrator (PFA) four months after he stayed without a job to access part of his pension savings, he was asked to complete the request form and after a month, he was paid.

“I would have liked to take more but my PFA insisted I cannot take more than 25 percent since I was not yet retired, but for me it was a good relief,” he said.

According to Obah, the advantage he had was that his employer had been regular in remitting his pensions.

“So, it was easy for my PFA to work out my 25 percent because it was meant to be both my accrued rights and what had been remitted to date,” he said.

Euphemia Ameh, who recently turned 50 years and has begun the process of accessing the balance in her RSA, said she collected 25 percent of the balance of the money when she lost her job four years ago.

“The money was quite helpful for me then because I used it to start a petty trade, which I am still managing till today,” she said.

According to her, she could not secure another job since then and she is looking forward to collecting her final balance after turning 50 years last January, saying because it is not enough to procure any of the retirement benefit options, she would go ahead to collect it.

The objective of the CPS is to ensure that every person who works in either the public or private sectors in Nigeria including the self-employed persons receives his/her retirement benefits as and when due.