63,000 Disengaged Workers Withdraw N20.64bn From Pension Funds

63,000 Disengaged Workers Withdraw N20.64bn From Pension Funds

The incessant loss of jobs by workers in the public and private sectors on a daily basis,  in the country, may have taken its tool on the N7.51 trillion pension assets as about 63,000 unemployed Nigerians withdrew N20.64 billion from their pension contributions in 2017 alone,
LEADERSHIP investigation can now reveal.

This payment is about 24 per cent of the total amount of N82.57 billion paid to this category of people since the inception of the Contributory Pension Scheme(CPS) in 2004.

Of the 63,000 disengaged workers, LEADERSHIP finding shows that 95 per cent of them are from private sector, an indication of lack of job security in the private sector of the nation's economy. The public sector seems to be better in terms of job security as only about five per cent of pension contributors were affected by the job loss.

The Pension Reforms Act (PRA) 2014, currently in use, makes provision for 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 their disengagement to access 25 per cent of their pension contributions.

Investigation shows that the cutting cost measure adopted by public and private entities is leading to consistent loss of jobs.

However, the lean prospect of finding a new job immediately after the loss of an earlier job, was responsible for increase in demand for 25 per cent of pension contributions.

A document sourced from the National Pension Commission (PenCom) revealed that, in the first quarter of last year, precisely, between January to March 2017, 15,863 pension contributors, under the age of 50 years, who were disengaged from work and were unable to secure another job within 4 months of disengagement, were granted N3.97 billion from their respective Retirement Savings Account(RSA).

Further findings show that the private sector accounted for 95.22 per cent of the disengaged RSA holders, with the public sector accounted for 4.78 per cent.

In the second quarter 2017, however, PenCom granted approval for payment of N5.17 billion to 13,337 disengaged workers, while in the third quarter, 16,165 unemployed RSA holders, who falls under the aforementioned category, were paid N5 billion from their pension accounts.

In the fourth quarter of 2017, approval was granted for payment of N6.54 billion to 17,828 RSA holders who were under the age of 50 years and were disengaged from work and unable to secure another job within 4 months of disengagement, thus, bring the cumulative payment for last year to N20.64 billion paid to 63,000 disengaged workers.

Further finding shows a cumulative total number of disengaged RSA holders who were paid 25 percent was 250,293 and were paid N82.57 billion from inception to date. From this figure, the private sector accounted for 95.40 percent (238,786) while the public sector accounted for 4.60 percent (11,507). 

Moreover, while some firms in both public and private sectors have downsized, some are preparing to lay-off more workers in the current year, in a bid to cut their expenditure, meaning that, more workers are going to be disengaged, hence, more pension contributors will demand for 25 per cent of their RSA balance in the current year.

Some of the beneficiaries, industry sources disclosed, are investing this money in their business ideas in a bid to be self employed, while some used it to meet their more immediate financial needs.   

Speaking in an exclusive interview with LEADERSHIP at the weekend, the Managing Director, AXA Mansard Pension Fund Administrator(PFA), Mr. Dapo Akinsanya, said the job loss shows the tough time the country is passing through, noting that, the pension industry is performing one of its civic responsibility, by paying the 25 per cent pension contribution to these beneficiaries. 

He said the industry is losing nothing as the investment income emanating from investment of pension assets far outweighs the payment made to these people.

Believing that this will also enhances the integrity of the new pension scheme, he added that, the pension funds has been growing irrespective of whatever payment made out of it.

The former Head, Benefits and Insurance Department, PenCom, Mr. Olulana Loyinmi, had, in 2016, 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 job loss adding that, 50 per cent of the documents PenCom processed on pension matters are actually from those demanding for 25 per cent of their pension contributions.

"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," he said then.

SOURCE: LEADERSHIP NEWSPAPER