Increasing job loss in the economy as a result of dwindling fortunes of business over high operational cost due to poor infrastructure and rising political risks in parts of the country have continued to put pressure on pensions funds, following withdrawals.
As at the end of fourth quarter 2017, no fewer than 17, 828 pension contributors who lost their jobs are were unable to secure another after four months, approached their Pension Fund Administrators for withdrawal of 25 percent of the balance in their retirement savings Account (RSA).
According to the National Pension Commission (PenCom) 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.
According to the Commission, the cumulative total number of disengaged RSA holders who were paid 25 percent was 250,293 and were paid N82.57 billion from inception of the Contributory Pension Scheme.
A further analysis showed that the private sector accounted for 95.40 percent (238,786) while the public sector accounted for 4.60 percent (11,507)
The implication of this is that PFAs are losing part of their investible funds to pay disengaged workers who could not secure jobs after a while and needed some money to sustain themselves.
Section 16(1) of the Pension Reform Act 2014 says that an employee shall not be entitled to make any withdrawal from his retirement savings account opened under section 11(1) of this section before attaining the age of 50 years. While 16(5) says notwithstanding the above, any employee who disengages or is disengaged from employment before the age of 50 years and is unable to secure another employment within four months of such disengagement may make withdrawal from his retirement savings account in accordance with the provision of section 7(2) and 3 of this Act.
“Where a Retirement Savings Account (RSA) holder is temporarily unemployed before the retirement age (i.e. he/she is voluntarily/involuntarily disengaged, downsized, retrenched etc.) and has remained unemployed for a period of at least four (4) months without securing another employment, such an individual may apply for 25 percent of his/her current RSA balance, one of the PFAs explained in its website.
Usman Suleiman, former managing director, FUG Pensions Limited had said really, the current rise in job losses has serious implications on the business. “Firstly, it would have impacted on our investible fund when a lot of people are coming to access 25 percent of the funds in their RSA, and secondly, is that the number of enrolment would be affected if unemployment rate is high”.
According to the National Bureau of Statistics, NBS, the unemployment rate in Nigeria went up 18.8 percent in Q3 2017 from 13.9 percent recorded in Q3 of 2016, marking the highest jobless rate since 2009.
On yearly basis, the unemployment rate increased by 4.9 percentage points while quarter-on-quarter it increased by 2.6 percentage points, as unemployment rate was 16.2 percent in Q2 2017.
The unemployed population in Nigeria, according to the NBS, increased to 15.99 million in Q3 2017 from 11.9 million in Q3 2016, accounting for a 25.6 percent increase year-on-year and a 15 percent quarter-on-quarter increase as unemployment population stood at 13.59 million in Q2 2017.
“Unemployment always increases whenever an economy experiences a recession, and in the case of Nigeria, where the unemployment rate was already high and rising even when the economy was growing strongly, it implies a recession would lead to an even sharper rise in unemployment than would normally have been expected,” said the state’s funded bureau.
The working class of citizens in Africa’s largest economy increased from 110.29 million in Q2 2017 to 111.13 million in Q3 of same year, accounting for a 2.79 percent increase when compared with 108.030 million recorded in Q3 2016.
This makes the labour force to rise from 83.94 million in Q2 2017 to 85.09 million in Q3 of the year under review, a 5.19 percent increase when compared with 80.67 million in Q3 2016.
Underemployment rate was up slightly from 21.1 percent in Q2 2017 to 21.2 percent in Q3 2017. On yearly basis, it increased by 1.5 percentage points, as underemployment rate was at 19.7 percent in Q3 2016.
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Author: MODESTUS ANAESORONYE