Sacked Workers’ Pension Savings Withdrawals Rise 212% in Q3 2020

By Ahmed Rahma

The COVID-19 pandemic hit many businesses, countries and individuals in 2020 by surprise and till now, the effect is still being felt.

Nigeria, which is one of the countries hit by the virus, though mildly when compared with countries in Europe and the United States of America (USA), slipped into a recession as a result of the contagion.

When the country, which is Africa’s largest economy, recorded its first case of coronavirus in late February, some people knew trouble was lurking around.

In March, President Muhammadu Buhari was forced to take the harsh decision of locking down Lagos, Ogun and Abuja to curtail the spread of the virus.

For more than three months and even up to six months, some businesses could not operate and citizens were locked in their homes and this led to a massive loss of jobs.

For some, there was nowhere to run to and their pension savings were their saving grace. They had to trigger a part of the law which allows them to withdraw 25 per cent of their savings.

In the third quarter of 2020, according to data from the National Pension Commission, the approval for the payment of N8.1 billion 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 was granted by the agency.

From the analysis of Business Post, this was 211.5 per cent higher than the amount approved by PenCom in the second of the year for sacked workers.

In the report, it was disclosed that approval was granted for the payment of N2.6 billion to 4,668 RSA holders who were under the age of 50 years and were laid off from work but unable to secure another job within four months of disengagement in Q2 of 2020.

In the first quarter of the year, PenCom said it approved the payment of N4.3 billion 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.

If these figures are added together, a total of 26,458 workers laid off from work have withdrawn about N15.0 billion in the first nine months of this year from their savings accounts.

According to the Pension Reform Act 2014, a worker who loses his job can withdraw 25 per cent of his RSA if he is unable to secure another employment in four months.

“The contributory pension was designed to allow access to 25 per cent 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 per cent of your RSA contribution,” the Head of Corporate Communications at PenCom, Mr Peter Aghahowa, said in the report.

The commission has also made it known that despite the impact of the COVID-19 pandemic on the economy, the total assets under the Contributory Pension Scheme (CPS) rose to N11.35 trillion as of the end of August.