Nigeria’s pension payout to unemployed at 7-year high as economy falters

Pension payments to temporarily unemployed Nigerians surged over the past year, reaching a seven-year high in the first quarter of this year as the country faces its worst economic crisis in a generation.

Between January and March 2024, 8,651 individuals received a total of N14.2 billion from their pension savings contributions under the Contributory Pension Scheme. Federal law permits people under 50 who have lost their jobs and have not found new employment within four months to access 25% of their pension savings.

The payout marks the highest quarterly distribution by pension fund administrators in the country since at least the first quarter of 2017, based on an analysis of government figures by Pluboard.

Excluding data gaps for two quarters, it is the highest since the third quarter of 2014, according to records from the National Pension Commission (PenCom).

The hefty payout comes as Nigerians grapple with the worst economic crisis in decades. Nearly 95% of the pension beneficiaries were from the private sector.

Galloping inflation – 35% in May and the highest in 28 years – and a severely weakened naira have forced several companies to shut down, leading to job losses.

In the last one year, several companies including Procter & Gamble Co., drug maker GSK Plc, Kimberly-Clark Corp., Nampak, Sanofi SA and Bayer AG have closed their Nigerian units. Others like Diageo and PZ have cut back on their operations.

Keeping The Trend

While the payout soared, the number of recipients remained fairly consistent with recent trends, suggesting that either more senior-level earners lost their jobs and received payments or the value of individual pensions increased.

This can be attributed to high returns on government securities and the stock market, where the bulk of pension savings are invested. Nigerian stocks yielded a 45.9% return in 2023.

“A total of 8,702 RSA holders requested to access 25% of their RSA balances due to temporary loss of employment,” PenCom reported.

“Out of that, 8,651 RSA holders’ requests were approved, while fifty-one (51) were rejected because their ages were above 50 years.”