Pension contributors withdraw N14.79bn as job losses rise

About 26,458 workers who lost their jobs since the COVID-19 pandemic started taking its toll on the economy withdrew N14.79bn from their Retirement Savings Accounts in 10 months, NIKE POPOOLA reports 

Records from the National Pension Commission have revealed that more job losers have continued to approach their Pension Funds Administrators to access parts of the funds in their Retirement Savings Accounts. 

Many businesses have been challenged and workers lost their jobs due to the hardships caused by the pandemic. 

Figures obtained from the quarterly accounts of PenCom showed a growing figure of job losers in the third quarter of 2020. 

According to the Pension Reform Act 2014, a worker who loses his job can withdraw 25 per cent of his RSA after waiting for four months and does not get another paid job. 

PenCom, in its first quarter report, said, “During the quarter under review, the commission granted approval for the payment of N4.31bn to 8,221 RSA holders who were under the age of 50 years and were disengaged from work but unable to secure another job within four months of disengagement.” 

According to the second quarter report, approval was granted for payment of N2.56bn to 4,668 RSA holders who were under the age of 50 years and were disengaged from work but unable to secure another job within four months of disengagement during the second quarter. 

The commission stated in its third quarter report that, “During third quarter 2020, the commission granted approval for the payment of N8.1bn to 13,569 RSA holders who were under the age of 50 years and were disengaged from work but unable to secure jobs within four months of disengagement. 

The Head, Corporate Communications, PenCom, Mr Peter Aghahowa, said workers who lost their jobs during the coronavirus pandemic would be able to get a quarter of the savings in their Retirement Savings Accounts to cushion their hardship after four months of job loss. 

He said that it had been observed increase in job loss due to the effect of the pandemic. 

According to him, “The contributory pension was designed to allow access to 25 per cent of retirement savings balance in a situation whereby you lose your job. 

“So if you lose your job, after four months you can access 25 per cent of your RSA contribution.” 

Despite the effect of the COVID-19 pandemic on the economy, the total assets under the Contributory Pension Scheme rose to N11.35tn as of the end of August, the commission revealed. 

According to the data from the commission, the funds rose from N11.08tn in June to N11.3tn in July. 

The pension commission revealed that N7.51tn or 66.27 per cent of the funds had been invested in Federal Government’s securities. 

Other areas where the funds were invested are domestic and foreign ordinary shares, corporate debt securities, local money market securities and mutual funds. 

The commission also disclosed in its second-quarter report that following the issuance of demand notices to some defaulting employers whose outstanding pension contribution liabilities had been established by recovery agents, 16 of the affected employers remitted the sum of N261.33m during the period. 

It said this represented a principal contribution of N152.79m and penalty of N108.54m during the quarter. 

This brought the total recoveries made from inception to June 30 to N17.52bn comprising principal contribution of N8.89bn and penalty of N8.63bn. 

During the quarter under review, PenCom said the Pension Fund Administrators registered a total of 2,839 contributors under the micro pension plan for which a total of N7.4m had been remitted to the Retirement Savings Accounts as pension contributions. 

Cumulatively, it stated that a total of 51,974 informal sector workers had registered for the MPP and contributed the sum of N42.1m as of June 30. 

The operators have also revealed that no fewer than 2,100 contributors have applied to change their Pension Fund Administrators barely two weeks after the National Pension Commission opened the transfer window. 

The transfer window, which was officially opened on November 16, allowed contributors in the Contributory Pension Scheme to change their pension companies at most, ones in a year. 

Aghahowa said the transfer window, which had been opened, would engender competition and improved service delivery in the pension industry. 

According to him, the contributors has the right to determine the PFAs that manage their RSAs. 

The President, Pension Fund Operators Association of Nigeria, Mr Wale Odutola, who is also the managing director/Chief Executive Officer, ARM Pension PFA, said pension fund operators had done the necessary requirement by upgrading their IT systems to enhance seamless pension account transfer. 

He said this would change service delivery in the entire pension industry, and benefit the contributors of the scheme. 

The ultimate aim, he added, was to grow the pension industry, make the pension funds have a bigger impact on the economy, and give good investment returns to stakeholders. 

The Head, ICT, PenCom, Mr Polycarp Anyanwu, stated, “Over 2,100 applications were submitted and received by the commission between 16th and 30th of November, 2020.” 

Polycarp noted that most of the contributors were not contented with the services of their PFAs.