Yemisi Izuora
The National Pension Commission, PenCom is worried over the spate of mass sack in key sectors of the economy.
The Commission expressed the concern that this would certainly affect the Contributory Pension Scheme, which is currently put at N5.9 trillion.
Over 177,000 employers, who have lost their jobs as at September 2016, have accessed 25 percent of their contributions in the Pension Scheme estimated at N49.55 billion.
The Pension Act allows a contributor to apply for a maximum of 25 per cent of his total contribution to his retirement account after at least four months of continuous unemployment.
Though Pension Fund operators allayed fears of possible negative effect on the scheme, they expressed concern that the mass withdrawals by disengaged workers could only slow down growth in the pension sector.
Going by the significant withdrawal, the N5.9 trillion total contributions is now down to N5.85 trillion and may go down further if more workers lose their employment.
The Head, Benefits and Insurance Department, PenCom, Olulana Loyinmi, said the increase in the number of contributors applying for the 25 per cent of their pension contributions was as a result of increase in the number of people that lost their jobs in the last nine months.
He said: “On the magnitude of people who have made temporary access to their retirement savings account in the form of withdrawals of 25 per cent, the latest figure as at September, 2016 is 177,000, which when compared to the number of people who have actually retired and are getting their pension, the figure are almost the same.”
“That is an indication of how people are losing their jobs or are getting disengaged and having waited for about four months without getting another job; they resort to access their retirement account. If you measure in number, the documents we process, it is almost about half (50%) of activities of the Commission since January.”
Earlier in the first quarter, PenCom disclosed it granted approval for the payment of N3.32 billion to 10,481 Retirement Savings Account (RSA) holders under the age of 50 years, who were disengaged and were unable to secure another job within four months of disengagement. These included over 270 federal government workers, 282 from the states, and over 9929 from the private sector.
Commenting on the impact of the massive job losses in both the private and public sectors on the Pension Scheme, the President, Pension Fund Operators Association of Nigeria (PenOp), Longe Eguarekhide, however argued that this will not cause a run on the pension fund.
He explained that as contributors withdraw, so also do active contributors make additional inflows, stressing that at best, it would slow down growth, but not a run.