81,000 Pension Contributors Lose Jobs In Two Years

As a result of increasing harsh economic environment on companies and individuals, which has resulted to rising unemployment in Nigeria, 81,000 pension contributors have lost their jobs in the last two years, representing a 17.4 percent increase from the two previous years.
The trend has made withdrawals by disengaged contributors from the pension fund to rise sharply by 30 per cent (47.8 billion) in the last two years, 2021 to 2022, from N36.45 billion in two previous years, 2019 to 2020.
According to the latest release from pension fund operators on Monday, such scenario was driven by the post COVID macroeconomic challenges, including the impact of the Russia/Ukraine war.
They also cited the ‘Japa’ syndrome, which refers to the increasing number of skilled and professional workers migrating out of the country, as another major factor behind the sharp increase in the number of disengaged pension contributors.
The sharp rise in job losses among pension fund contributors mirrors the rising unemployment in the country, following the economic recession and weak economic growth prompted by COVID-19 economic lockdown.
Although the National Bureau of Statistics (NBS) recorded an increase in the national unemployment rate from 23.1per cent in 2018 to 33.3per cent in 2020, a report by a global auditing firm, KPMG, estimate that this rate has increased to 37.7 per cent in 2022 and will rise further to 40.6 per cent in 2023.
While assuring that the health of the pension scheme is still strong with monthly contributions growing, pension fund operators, however, express concern that the number of disengaged pension contributors may continue to increase except there is improvement in the general macroeconomic environment.
The Pension Reform Act permits disengaged workers (retrenched pension contributors) to withdraw 25 per cent of their pension savings four months after disengagement.
Analysis of data from Pension Commission of Nigeria, PenCom, has shown that 81,504 workers were disengaged in the last two years, namely; 40,646 workers in 2022 and 40,858 in 2021.
This represents a 17.4 per cent increase when compared with 69,390 workers disengaged in the two previous years, namely, 37,674 workers in 2019 and 31,716 workers in 2020.
Following the same pattern at a faster pace, the value withdrawal from pension funds by disengaged workers grew by 30 per cent to N47.76 billion between 2021 and 2022, from N36.45 billion between 2019 and 2020.
The operators attribute the huge value of funds being withdrawn to migration of skilled workers with higher pay brackets abroad.

By: Corlins Walter