A total of 482,857 disengaged workers, primarily from the private sector, have sought solace in their pension contributions, withdrawing N217.4 billion from pension fund assets amidst a harsh business operating environment, recent reports from the National Pension Commission (PenCom) indicate. The disengaged workers, affected by downsizing and economic challenges, accessed the funds to sustain their livelihoods, with the total pension fund assets reaching N18.3 trillion as of December 2023.
According to the breakdown of the 3rd Quarter 2023 report, disengaged workers accessed N43.4 billion from their pension savings between Q3, 2022, and Q3, 2023. Cumulatively, from 2004 when the Contributory Pension Scheme (CPS) took effect to the third quarter of 2023, a total of N217.4 billion has been withdrawn, with expectations of additional withdrawals in Q4, 2023.
The Pension Reforms Act (PRA) 2014 allows contributors under the age of 50 who were disengaged and unable to secure another job within four months to access 25% of their Retirement Savings Accounts (RSAs) balance. The challenging business environment, coupled with factors like high inflation, low purchasing power, and forex volatility, has led to companies reducing staff strength, resulting in more individuals turning to their pension contributions for financial relief.
Some disengaged workers reportedly invested the withdrawn funds in business ventures to become self-employed, while others utilized the money for immediate financial needs. In Q3, 2023, 7,688 RSA holders, mainly from the private sector, were approved to access 25% of their RSA balances, totaling N8.6 billion.
Pension industry sources revealed that the number of contributors requesting the 25% permissible withdrawal has increased due to heightened awareness and the challenging economic landscape leading to job losses. The Pension Fund Administrators (PFAs) assured contributors that the impact of the withdrawals would not significantly affect the pension assets, given the profitable investment returns. PenCom’s Director General, Mrs. Aisha Dahir-Umar, emphasized that the 25% withdrawal is a legal provision, assuring contributors that their funds are secure. She encouraged Nigerian workers to enroll in the CPS to benefit from such initiatives.
