Workers Turn To Pension Contributions For Relief

Electricity Workers Protest

More unemployed Nigerians have resorted to drawing 25 per cent of their pension contributions to meet their financial needs, following the current economic challenges in the country, which has led to some companies disengaging their staff, LEADERSHIP Weekend 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 were 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.


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 confronting the nation, meaning more requests are in the offing.

Some Pension Fund Administrators (PFAs) confirmed to LEADERSHIP Weekend that there are requests from the disengaged workers to get 25 per cent of their contribution, though 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 their money in private businesses in a order to be self-employed, while some used it to meet their more immediate financial needs.

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

He said, “Because many workers are being laid off in organisations, with some companies closing shops, 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 for 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. So, the rush is not much, but it is there.”

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

PenCom stated that in the first quarter of the year, it granted approval for the payment of N3.32 billion to 10,481 Retirement Savings Account (RSA) holders under the age of 50 years who were disengaged and were unable to secure another job within four months of 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 that during the quarter under review, 270 of the disengaged workers were the federal government employment, 282 from the states and 9929 from the private sector amounting to 10,481 workers.

Experts also said they 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.

Naira appreciates, now N422/$

Meanwhile, the Naira yesterday appreciated against the dollar in all the segments of the Forex market.

The Nigerian currency exchanged at N422 to the dollar, gaining 3 points from N425 it traded on Thursday, while the Pound Sterling and the Euro closed at N535 and N464 respectively.

At the Bureau De Change segment of the market, the Naira also strengthened against the dollar, exchanging at N415, and N535 and N460 to the Pound Sterling and the Euro, respectively.

At the inter-bank segment of the market, the Naira extended its gains, closing at N314.77 to the dollar, from N331 it recorded at the end of trading on Tuesday.

Traders at the market expressed the hope that the Naira would appreciate further with the lifting of the ban on nine banks from participating in the Forex market by the Central Bank of Nigeria.

The CBN had earlier banned nine Deposit Money Banks from dealing on Forex for their failure to comply with government’s directive on the Treasury Single Account. (NAN)

Nigeria’s Economy Will Grow Again In 2017 – Moody

Meanwhile, Moody, one of the big-three credit rating agencies in the world, has projected that Nigeria’s economy will grow again and the country will get out of economic recession in 2017.

Disclosing this in a report released yesterday, entitled ‘Government of Nigeria: FAQ on Credit Implications of Naira Depreciation, Low Oil Price and Broader Economic Challenges,’ the rating agency stated that the country will experience a “subdued growth at 2.5% in 2017.

“We expect that Nigeria will contain pressures on its public finances in the short term. However, there is greater doubt about the severity of the impact of these challenges, particularly on government liquidity and economic growth, over the medium term,” says Aurelien Mali, a VP-Senior credit officer at Moody’s.

The report also urged the federal government to comfortably meet its financing gap over the next 12 to 18 months, saying increasing liquidity pressures; rising inflation and stagnant growth pose key challenges. The rating agency also said that the devaluation of the naira is a positive step in building the nation’s economy.

The Central Bank of Nigeria (CBN) had floated the naira, which effectively devalued the naira.

In its report, Moody said,  “Overall, Moody’s views the recent devaluation of the naira as credit positive. The new system should enable the naira to better absorb external shocks over time, and dollar availability should gradually increase,” the report read.

“The depreciation implies a material loss in purchasing power given import-price inflation. Moody’s expects inflation to accelerate to 18% by year’s end, before falling to an average of 12.5% in 2017 (based on the recent 2 percentage point hike in the central bank’s policy rate to 14%).

“Moreover, the fiscal benefit of the depreciation and the current oil price (which is above the budgeted oil price) exceeds the loss in oil output. States and local governments will benefit from the naira depreciation, offsetting the negative impact on oil production from the recent attacks in the Niger Delta. Moody’s expects authorities to reduce spending if revenues underperform.”

The rating agency expects that the depreciation will increase Nigeria’s external debt marginally to 5.2% of GDP by end-2016 from 3.3% in 2015.

Moody’s fiscal outlook for Nigeria’s general government’s fiscal position has not materially changed since April. The rating agency expects it to remain in deficit at around 3.7% of GDP in 2016, after posting a 3.8% deficit in 2015.

Diversification, Way Out Of Economy Downturn – Emefiele

Meanwhile, the Central Bank Governor, Mr Godwin Emefiele has reiterated that refocusing the nation’s priorities by diversifying the economy into other areas such as agriculture, mineral resources and tourism among others rather than crude oil is the way of repositioning the dwindling economy.

Emefiele, in his lecture at the National Institute for Policy and Strategic Studies told participants that the impetus to strengthen institutional mechanism for poverty reduction and inclusive development could only be achieved with citizen’s reorientation.

“Nigerians must depend less on foreign goods and look inward rather than being an importing nation”, he stressed.

The CBN governor was the guest lecturer at the Senior Executive Course organised for 38 participants at the National Institute for Policy and Strategic Studies, Kuru in Jos, Plateau State.

He addressed the participants on different issues bordering on the economic situation that has been bothering Nigerians, especially on the role of the apex bank in finding solutions to the economy that has glided into recession.

Looking at the dilemma of policy making amidst complicated and competing choices in revamping the economy, Emefiele did not mince words, while speaking on the title, ‘managing monetary policy in turbulent times’.

He called for diversification of the economy away from crude oil to other sectors, including agriculture which was the mainstay of the nation’s economy before the discovery of the black gold.

Attracting investors into the country, as explained by the banker, is the introduction of the flexible exchange rate which is to protect the foreign reserve and act as a measure to stabilise the economy.

With the Central Bank governor’s conviction that diversifying the economy from overdependence on crude oil into other areas, particularly agriculture, is the way out of recession, the impetus to achieve this objective should be vigorously and diligently applied and monitored so that the dividends will be enjoyed by Nigerians.