As economic challenges persist, contributors to Nigeria’s micro-pension scheme are increasingly resorting to contingency withdrawals, impacting the stability of their retirement savings.
According to data from the National Pension Commission (PenCom), contingency withdrawals from micro pension funds surged by a staggering 245.2 per cent in 2023, reaching a total of N21.4 million compared to N6.2 million in the previous year. The number of contributors availing these withdrawals also rose by 68.4 per cent, reaching 64 individuals in 2023, up from 38 in 2022.
The micro-pension plan (MPP), established by PenCom, aims to promote pension savings among low-income groups, particularly those in the informal sector and self-employed individuals, to ensure financial security during retirement.
However, with the Nigerian economy facing severe challenges, including underperformance in the low-income pension category and missed enrollment targets, many contributors are feeling compelled to tap into their pension savings prematurely.
Quarterly breakdowns of withdrawals in 2023 reveal a fluctuating pattern, with withdrawals totaling N2.98 million in Q1’23, rising to N10.46 million in Q3’23, before declining to N4.87 million in Q4’23.
Experts warn that unless significant economic reforms are implemented, the trend of increased withdrawals is likely to persist. Executive Director of the Center for Pension Rights Advocacy, Mr. Ivor Takor, emphasized the need for government intervention to address the root causes of economic distress. He stressed that a stable economy is essential to alleviate the financial pressures prompting pension withdrawals.
Similarly, Managing Director of Achor Actuarial Services, Mr. Pius Apere, underscored the importance of micro pension schemes in safeguarding individuals from retirement poverty. He urged the government to prioritize economic revitalization efforts to curb further withdrawals from pension savings.
In response, Mrs. Aisha Dahir-Umar, the Director-General of PenCom, reiterated the significance of the micro-pension plan in enhancing the financial security of participants in the informal sector. She emphasized the role of the initiative in fostering a savings culture and reducing dependence on extended family support during retirement.
