More Nigerians who have lost their jobs are turning to their pension funds to help them weather the current economic downturn.
Data obtained from the National Pension Commission (PenCom) show that from first quarter of 2018 to first quarter of 2021 a total of 48,873 Nigerians under the age of 50 who are no longer working have accessed about 25 percent of their Retirement Savings Account.
These disengaged Nigerians were unable to find a new job within four months after being laid off.
44,615 of these disengaged workers are from private businesses, accounting for about 91.2 percent, while 4,258 (or 8.7 percent) are former federal and state government employees.
According to a quarterly breakdown of PenCom data, 10,619 disengaged Nigerians accessed their pension in the first three months of this year (January-March).
This represents a 29.1 percent increase from 8,221 in the corresponding period of 2020.
The data for the first quarter of 2021, on the other hand, show a 9.9 percent decrease from 11,796 disengaged workers in the fourth quarter of 2020.
In fact, in the last 3 years (2018-2021, Q1) where 3.9 million Nigerians lost their jobs, PenCom data revealed 389,282 jobless Nigerians before retirement have had to resort to their Retirement Savings Account for survival.
Between 2018 and 2019, a cumulative total of 340,409 made withdrawals.
“The withdrawal of pension funds by disengaged workers can be correctly attributed to the rising loss of jobs as a result of the current economic situation,” a staff member of one of the PFAs told RipplesNigeria on the condition of anonymity.
He also confirmed his organization is currently dealing with an increase in applications for withdrawal.
“Yes, we get calls requesting for help with withdrawals. While this can be a last resort, since everyone needs something to fall back on to fulfill basic requirements and maintain their families, it is advised for anybody not to,” he said.
According to Section 7(2) of the Pension Reform Act 2014 where an employee voluntarily retires, disengages or is disengaged from employment, as provided for under subsections (2) and (5) of section 16 of this Bill, the employee may, with approval of the Commission, withdraw an amount of money not exceeding 25 percent of the total amount credited to his or her retirement savings account, provided that such withdrawal shall only be made after four months of such retirement or cessation of employment and the employee does not secure another employment.
How much was withdrawn?
According to the latest data from PenCom, N5.02 billion was withdrawn between January and March this year, up from N4.3 billion in the same period the previous year.
In the fourth quarter of 2020, N5.3 billion was withdrawn, compared to N8.09 billion in the third quarter.
The N2.5 billion withdrawal in Q2 2020 brings the total number of disengaged workers’ withdrawals in the past 15 months to above N25 billion.
By David Ibemere…
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