Incidences in Nigeria in 2020, particularly Covid-19 pandemic, #EndSARS protest and eventual nose-diving into recession of the economy in the last quarter have continued to leave harsh impacts on citizens and their standard of living.
Job loss, a major economic indicator, has been on the rise with affected employees both in the public and private sectors increasingly falling back on their pension savings for survival.
According to the third quarter 2020 report of the National Pension Commission (PenCom), approval was given to 13,569 Retirement Savings Account (RSA) holders under the age of 50 who disengaged from work but unable to secure jobs within four months of disengagement to access 25 percent of the contributions.
This amounted to N8.10 billion, a 44.39 percent increase from N5.61 billion paid to 9,402 RSA holders in the last quarter of 2019.
According to Pension Reform Act, where an employee voluntarily retirees, disengages or is disengaged, he/she can have access to 25 percent of his/her RSA provided that such employee is unable to secure another employment after 4 (four) months of such retirement.
Omo Omoregbe, a sacked employee in one of the local airlines, said she had decided to take part of her pension savings to start off a business since no job was coming.
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Omoregbe, who lost her job during the Covid-19 pandemic lockdown that affected airlines, said, “I am happy that the law recognised that people could lose their jobs while contributing, so I don’t have option than to access my savings.”
She stated that she will use the money she gets from the PFA to start off a shop, “I have already applied and my money is coming out soon.”
According to data obtained from the National Bureau of Statistics (NBS)’Labour Force Survey,’ Nigeria’s unemployment rate was 27 percent in second quarter 2020, a four percentage points higher than the 23 percent reported in third quarter 2018.
According to the survey, underemployment rate was 29 percent, which was higher than the 20 percent recorded in Q3 2018.
When combined, 52 percent of the labour force is either without jobs or working below their potential.
According to PwC in its ‘Nigeria Economic Alerts’ released September 2020, some of the factors that account for the rise in the unemployment and underemployment rates include the low level of industrialisation in the country, slow economic growth, low employability and quality of the labour force, slow implementation of the national labour policy, in addition to lack of coordinating labour policies at the sub-national level.
PwC estimated that unemployment could reach 28 percent in Q3 2020 and 30 percent by Q4 2020, based on her internal models.
The objectives of the Contributory Pension Scheme are to ensure that every person who worked in either the public Service of the Federation, Federal Capital Territory, States and Local government or the private sector receives his/her retirement benefits as and when due; and to assist improvident individuals by ensuring they save in order to cater for their livelihood at old age.
The provisions of this Act shall apply to any employment in the public service of the Federation, the public service of the Federal Capital Territory, the public service of the state, the public service of the local governments and the private sector.
In the case of the private sector, the Scheme shall apply to employees who are in the employment of an organisation in which there are three or more employees.
Notwithstanding the provision of subsection (2) of this section, employee of organisation with less than three employees as well as self-employed persons shall be entitled to participate under the micro pension scheme in accordance with guidelines issued by the commission.
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