Economic downturn: Unemployed Nigerians can draw from pension fund

As companies in both public and private sectors keep closing down, with some laying off their staff on  daily basis, as a result of the current economic downturn in the country, more unemployed Nigerians have the opportunity of resorting to drawing 25 per cent of their pension contributions to meet their financial needs, Business247 News Online has learnt.

The Pension Reforms Act 2014, currently in use, makes provision for Retirement Savings Account (RSA) holders under the age of 50 years who were disengaged and are unable to secure another job within four months of their disengagement to access 25 per cent of their pension contributions.

Although most disengaged workers, according to our findings, are not aware of this provision, there has been an increase in the rate of request to access the 25 per cent contribution in recent time and industry watchers expect more people to draw from their contributions, especially as the country enters recession and the lean prospect of finding a new job immediately after the loss of an earlier job.

Moreover, while some firms in both public and private sectors have downsized, some are preparing to lay-off more workers in a bid to cope with the emerging economic realities battling the nation, meaning, more requests are in the offing.

Some Pension Fund Administrators (PFAs) confirmed to Business 247 News Online that there are requests from disengaged workers to get 25 per cent of their contribution, although it seems the disengaged workers in the lower cadre are the ones taking advantage of this provision.

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

Speaking on this development, Managing Director/CEO, IEI Anchor Pension Managers Limited, Mr. Glory Etaduovie said though there were some requests in this line, but not all disengaged workers are applying for it.

According to him, “Because many workers are being laid off in organisations, with some companies closing down, yes, there have been some requests for the 25 per cent, but not all are doing it.  Some look for ready alternatives because they know the advantage of retaining the money without quickly going to cash it.

“But more often, I think the lower cadre staff are those who quickly rush to take that advantage. Intermediate and above, may be, are a little bit cushion for a longer time and probably, can quickly get something else as a buffer either a new job or something else. So, the rush is not much, but it’s there.”

Earlier, the National Pension Commission (PenCom) said since the inception of the Contributory Pension Scheme (CPS), N49.55 billion has been paid to 159,361 disengaged Nigerian workers who could not secure a new job after four months.

PenCom, who stated this in its 2016 first quarter review, stressed that in the first quarter of this year (2016), it granted approval for the payment of N3.32 billion to 10,481 RSA holders under the age of 50 years who were disengaged and were unable to secure another job within four months disengagement.

The commission noted that the private sector accounted for 95.55 per cent (152,262) of the disengaged RSA holders, who received a total of N49.55 billion being 25 per cent of their RSA balances as at the time they were disengaged.

The regulator said during the quarter under review, 270 of the disengaged workers were from the Federal Government employment; 282 from the states and 9,929 from the private sector amounting to 10,481 workers and payment of N3.32 billion within the quarter.

Experts expect the number of beneficiaries to have grown beyond this and the volume of accessed fund increased by the time the report for the second and third quarters are released by the commission.