The Hard Economy Former Employees Drain Pension Funds to the Tune of N217.4bn

According to exclusive information obtained by LEADERSHIP, 482,857 disengaged workers, mostly from the private sector, have turned to their pension contributions for solace as a consequence of company downsizing caused by the tough business operating environment. These workers have taken N217.4 billion from the assets of their pension funds.

Assets held by the pension fund reached N18.3 trillion as of December 2023.

Disengaged workers have taken out N43.4 billion from their pension funds between Q3, 2022 and Q3, 2023 to keep themselves afloat until they find new employment, according to the National Pension Commission’s (PenCom) analysis of the pension industry’s third quarter report for 2023, which was released over the weekend.

So far, a total of N217.4 billion has been withheld from the Contributory Pension Scheme (CPS) since its implementation in 2004 until the third quarter of 2023. It is anticipated that an additional N8 billion will have been withheld in Q4, 2023, a situation that will be better understood when the industry regulator releases the data, bringing the total amount withheld to N225 billion.

Under the Pension Reforms Act (PRA) of 2014, individuals who are under the age of 50 and who were unemployed for more than four months and who were unable to find another employment within that time can receive 25% of their RSA balance.

Companies have cut staffing levels due to factors such as the high inflation rate, poor purchasing power, currency volatility, and the tough commercial operating environment. This has added to the already saturated labor market.

Leave a Reply

Your email address will not be published. Required fields are marked *