FG IN TROUBLE… AS PENSION FUND DRIES UP
The federal government is currently panicking because the Contributory Pension Scheme (CPS), currently put at over N5.9 trillion is be threatened as sacked workers are demanding the 25 per cent of their total contributions to it.
Global News has learnt that the Nigerian Pension Act which allows a contributor to apply for a maximum of 25 per cent of his total contribution to his retirement account after at least four months of continuous unemployment is now giving the FG a serious cause for concern as many people have lost their jobs in recent times.
Already, about 180,000 employers from different sectors of Nigeria’s ailing economy, who have lost their various means of livelihood as at September 2016, have accessed twenty-five percent of their contributions in the Pension Scheme which is estimated at N49.55 billion.
This means that the N5.9 trillion total contributions is now down to N5.85 trillion and will deplete even further at a faster rate, as thousands of more workers are going to be disengaged due to poor profitability arising from the harsh economic realities on the ground.
However, Pension Fund operators allayed fears of possible run on the scheme, saying that the mass withdrawals by disengaged workers will only slow down growth in the pension sector.This worrisome development is already giving the National Pension Commission (PenCom) a cause for concern as we gathered that a larger percentage of the over N49.55 billion pension benefits already paid out by the Pension Fund Administrators (PFAs) to disengaged workers went to junior staff.
According to a top expert in the Pension sector,the significant and sudden increase in the number of contributors applying for the 25 per cent of their pension contributions was occasioned by the unforeseen increase in the number of people that lost their jobs in the last nine months.
He said: “On the magnitude of people who have made temporary access to their retirement savings account in the form of withdrawals of 25 per cent, the latest figure as at September 2016 is a little below 180,000, which when compared to the number of people who have actually retired and are getting their pension, the figure are almost the same.”.
The Pension Commission leadership is also said to be in talks with the Presidency,the National Assembly and other vital arms of the Nigerian government directly linked with the Pension matters on how to reverse the way the country’s pension fund is gradually drying up.The Pension Commission is also apprehensive because of the fact that the number of documents it processes as you read this is so staggering and has hinted that should this trend go on unabated,the pension fund would be gone in a matter of months.
And with the way people are losing their jobs or are getting disengaged in all the sectors across the country, there are strong indications that the the country’s main pension pot will deplete further and will ultimately dry up before the end of quarter three of year 2017.