Pension Exodus: Q2 2023 Sees N208.86 Billion Withdrawn Amid Job Loss, Reveals PenOp

In a recent revelation by the Pension Fund Operators Association of Nigeria (PenOp), a staggering sum of N208.86 billion has been disbursed to a substantial cohort of 475,230 Nigerians who found themselves unemployed during the second quarter of 2023. This disclosure came to light during a media parley themed ‘At the Dawn of 20 Years of Pension Reform, What are the Gains?’ organized by PenOp for reporters based in Abuja. Oguche Agudah, the Chief Executive Officer at PenOp, shared these insights during the event.

According to Agudah’s presentation document, a comparative analysis reveals a significant evolution from the third quarter of 2011, where N3.86 billion was disbursed to over 27,169 Retirement Savings Accounts (RSA) holders under the Contributory Pension Scheme (CPS). Fast forward to the second quarter of 2023, and the number of RSA holders who experienced job loss skyrocketed by a staggering 1,649.18%, accompanied by a remarkable 5,310.88% surge in the disbursed amount.

Delving into the intricacies of the Pension Reform Act of 2014, Agudah highlighted Section 7(2), which outlines the conditions for withdrawing funds from the retirement savings account in the event of voluntary retirement, disengagement, or termination of employment. As per the Act, an employee can, with the approval of the National Pension Commission, withdraw up to 25% of the total amount credited to their RSA. This withdrawal, however, is permissible only after a four-month period following retirement or cessation of employment, provided the employee does not secure alternative employment.

Agudah proceeded to break down the amounts released to individuals who lost their jobs and were entitled to the 25% withdrawal from their RSA. The data revealed that by 2015, N32.50 billion had been disbursed to 125,395 RSA holders facing unemployment. This figure rose to N116.88 billion for 331,003 RSA holders by the third quarter of 2019. Moving forward, Q3 2022 saw N182.2 billion disbursed to 443,720 RSA holders, culminating in a substantial N208.86 billion being paid out to 475,230 Nigerians by the second quarter of 2023.

Beyond the scope of job loss, Agudah shed light on death benefits payment to next of kin, disclosing that over N356 billion had been disbursed to more than 91,000 employee beneficiaries by the second quarter of 2023. Additionally, he touched upon the matter of a 20% equity contribution for mortgage, revealing that over N7.8 billion had been paid to more than 600 applicants within the same period.

Demonstrating a forward-looking approach, Agudah emphasized that PenOp is actively engaged in discussions with the government to explore various incentives aimed at fostering increased participation in Micro Pension Funds. This initiative, operating under the CPS framework, enables self-employed Nigerians to contribute towards their retirement, aligning with the broader goal of encouraging financial prudence and long-term financial security among the nation’s workforce.