Consistent Rise in Unemployment Forced Pension Account Holders to Withdraw N14.79 Billion in 10 Months

The rising unemployment number due to the COVID-19 pandemic has forced many pension account holders to start withdrawing part of the funds.

According to the report from the National Pension Commission, it was revealed that pension account holders who lost their jobs have continuously approached their Pension Funds Administrators to withdraw parts of their funds from their Retirement Savings Accounts.

The Pension Reform Act 2014, allows a worker who lost his job to access 25 percent of his RSA if the individual fails to get another paid job after four months.

In the first-quarter report, PenCom said, “During the quarter under review, the commission granted approval for the payment of N4.31bn to 8,221 RSA holders who were under the age of 50 years and were disengaged from work but unable to secure another job within four months of disengagement”.

The second-quarter report shows that the commission granted another approval for payment of N2.56bn to 4,668 RSA holders who were under the age of 50 years and were disengaged from work but unable to secure another job within four months of disengagement.

The commission third-quarter report further explained that “During third quarter 2020, the commission granted approval for the payment of N8.1bn to 13,569 RSA holders who were under the age of 50 years and were disengaged from work but unable to secure jobs within four months of disengagement”.

Mr. Peter Aghaowa, the Head of Corporate Communications, PenCom, said that in order to lessen the hardship faced by workers who lost their jobs as a result of the negative impact of the global health pandemic, an account holder who lost his/her job would be granted approval to withdraw a quarter of the savings in their Retirement Savings Accounts if he/she fails to secure a paid job after four months.

Mr. Peter said, “The contributory pension was designed to allow access to 25 percent of retirement savings balance in a situation whereby you lose your job. “So if you lose your job, after four months you can access 25 percent of your RSA contribution”.

Following the launching of the Transfer window for RSA account holders, it was revealed that over 2,100 account holders have submitted applications to change their Pension Fund Administrators. This happened less than two weeks after the transfer window was officially opened on November 16, 2020.

Aghahowa explained that this new development would enhance competition and improve service delivery in the pension industry.

He also said that RSA account holders will now have the right to determine the PFAs that will manage their account and also change to another pension company at most ones in a year

Mr. Polycarp Anyanwu, Head of ICT at PenCom said, “Over 2,100 applications were submitted and received by the commission between 16th and 30th of November, 2020.”

He also noted that most RSA account holders were not satisfied with the current service of their PFAs and hence the need to change to a better one.

Mr. Wale Odutola, the President of Pension Fund Operators Association of Nigeria, who is also the managing director/Chief Executive Officer, ARM Pension PFA, said that pension fund operators had executed the necessary requirement by upgrading their IT systems to enhance seamless pension account transfer.

He further said that the principal aim is to grow the pension industry, ensure that pension funds have a bigger impact on the economy, and give good investment returns to stakeholders.