In the second quarter of 2024, 483,464 Nigerians withdrew N247.47 billion from their Retirement Savings Accounts (RSAs) due to job losses, according to the National Pension Commission (PenCom). This withdrawal represents 25% of their pension savings and underscores the growing impact of rising business costs in Nigeria, which have contributed to widespread unemployment.
The amount withdrawn in Q2 2024 significantly surpassed the N182.2 billion taken out by 443,720 RSA holders in Q3 2022, reflecting worsening economic conditions that critics attribute to poor policies by the current administration.
This information was shared by Ogwuche Aguda, CEO of the Pension Funds Operators Association of Nigeria (PenOp), during the 2024 annual conference of the Pension Correspondents Association of Nigeria (PenCAN) in Abuja. Aguda noted that contributions to the contributory pension scheme from both public and private sectors reached N5.72 trillion in Q2 2024, with total pension assets amounting to N20.87 trillion.
As of July 2024, Aguda reported that N169.67 billion (0.81% of total assets) had been invested in infrastructure. Additionally, N2.16 trillion (10.35% of total assets) was invested in the equity market, while N2.25 trillion was allocated to corporate debt during the same quarter.
Aguda praised the Contributory Pension Scheme (CPS) for transforming pension management in Nigeria, describing it as a move from a failing system to a more transparent and reliable one.
However, the National Union of Pensioners criticized the 2004 Pension Reform Act for not addressing critical issues, such as the need for periodic pension adjustments for retirees. The union claims this has led the Nigeria Police Force to consider exiting the CPS.
“The new scheme could improve if we tackle its challenges. There have been no increases for years, prompting the Police and others to want to leave the scheme,” stated Bunmi Olukolade, the union’s publicity secretary. He emphasized that inadequate post-retirement support has driven many to engage in corrupt practices for financial security in old age. “If pensioners were adequately cared for after service, agencies like the ICPC and EFCC would have less to address,” he remarked.
Meanwhile, PenCom reassured Nigerians that the federal government’s outstanding pension liabilities under the CPS will be resolved soon. Director-General Mrs. Omolola Bridget Oloworaran, represented by Corporate Communications head Ibrahim Buwai, confirmed that the backlog of pension liabilities has been calculated and efforts are underway to address it promptly. “This issue will soon be behind us,” Buwai affirmed, reiterating the government’s commitment to clearing the arrears.
Additionally, she mentioned that RSA holders can now use part of their pension savings for equity contributions toward residential mortgages. “This initiative has already helped over 5,000 workers achieve homeownership, with N47.13 billion disbursed as equity contributions from their RSAs to mortgage lenders.”