- Contributory Pension Scheme Provides Relief for 475,235 Jobless Contributors
Recent data released by the National Pension Commission (PenCom) has revealed that Nigerians grappling with unemployment have tapped into their savings under the Contributory Pension Scheme (CPS) to the tune of N208.56 billion. These withdrawals were initiated to alleviate the financial strain caused by job losses.
The second-quarter industry performance report from PenCom discloses that from the inception of the CPS in 2004 up to June 2023, approximately 475,235 contributors, referred to as Retirement Saving Account (RSA) holders, accessed these funds after losing their jobs.
The economic challenges facing Nigeria in recent years, including mounting inflation, have led to a surge in job losses and an increase in unemployment. The National Bureau of Statistics reported last year that around 133 million Nigerians were grappling with multidimensional poverty, while the World Bank stated in July that inflation had pushed an estimated four million more Nigerians into poverty within the first five months of the year.
The Pension Reform Act of 2014 outlines that employees who voluntarily retire, disengage, or are disengaged from employment can withdraw up to 25 percent of the total amount in their retirement savings account with the approval of the commission. However, such withdrawals are only permitted after a four-month period following retirement or cessation of employment, provided that the employee does not secure another job.
The data from PenCom indicates that the private sector accounts for the majority of those accessing their pension savings, with 453,013 individuals making withdrawals. In the public sector, 13,571 beneficiaries worked for the federal government, while 8,585 worked for state governments.
This access to RSA funds allows for the withdrawal of 25 percent of the RSA balance for employees who have been disengaged, resigned, or retired from employment before reaching the age of 50 and who have not secured new employment within four months.
The data further reveals that 8,453 RSA holders sought access to 25 percent of their RSA balances due to temporary unemployment. Of these applicants, 8,423 had their requests approved, while 30 were rejected because they were above the age of 50.
Agudah Oguche, CEO of the Pension Fund Operators Association of Nigeria, emphasized the success of the CPS in supporting contributors during challenging times. He highlighted how the CPS, as introduced by the Pension Reform Act of 2004 and revised in 2014, ensures financial assistance for individuals entitled to it, whether in life or death.
Julius Obah, a former employee in an advertising firm who lost his job amid the COVID-19 pandemic’s economic impact, shared his experience. He was able to access part of his pension savings after four months of joblessness, providing much-needed relief.
The Contributory Pension Scheme’s objective is to guarantee that every person who has worked in Nigeria’s public or private sectors, including self-employed individuals, receives their retirement benefits in a timely manner.
This data underscores the critical role played by the CPS in providing financial support to individuals facing unemployment, thereby contributing to financial security during challenging times.