Nigerian Pension Administrators Groan As Workers Withdraw N61.8bn Savings

The biting recession in the country may have made 192,905 former workers, who maintained Retirement Savings Accounts with their respective Pension Fund Administrators, as prescribed by the Contributory Pension Scheme, to withdraw N61.89bn as of the end of 2016.

According to information on the withdrawal of 25 per cent of the RSA balance obtained by our correspondent from the National Pension Commission, the affected individuals are those who lost their jobs and could not secure other paid employment after four months.
The economic recession, which is taking a toll on most employers of labour in the country, has led to the closure of many enterprises, mass retrenchment, while some workers have had to voluntarily resign from paid employment due to inconsistency in their monthly salary payments.

According to the Pension Reform Act, 2014, workers who lose their jobs and cannot get other paid employment after four months can apply for 25 per cent of the total balance in their RSAs.
“A total of N61.89bn was paid to 192,905 contributors who could not secure any form of employment after four months of losing their jobs as of the end of 2016,” PenCom stated.
The commission noted that from inception of the CPS to third quarter of 2015, a total of 125,395 former workers withdrew N32.4bn from their RSAs, and that the figure of withdrawal rose to N61.8bn at the end of 2016.
Some operators, who spoke to our correspondent on the development, said the increasing rate at which workers were demanding for part of their pension savings was worrisome, because it was draining the money at their disposal and leaving them with little funds to invest.
According to them, the funds are supposed to be kept in the custody of the operators over a long period of time and should be invested in order to yield profits.
The Director-General, PenCom, Mrs. Chinelo Anohu-Amazu, said that during the implementation of the PRA 2004, it was observed that it was imperative to review the pension scheme.
According to her, the re-enactment of the PRA in July 2014 provided a sound basis to guide the second decade of the country’s pension reform.
“Some of the major developments introduced by the new law include reduction in the waiting period for contributors to access their RSAs in the event of temporary loss of job from six months to four months,” she explained.
The PenCom boss said the PRA 2014 sought to ensure that more tangible benefits accrue to retirees so that they could have a more blissful retirement.
The Chairman, Pension Fund Operators Association of Nigeria, Mr. Eguarekhide Longe, also said the pension funds were being optimally invested and professionally managed by the PFAs.