23,673 disengaged workers withdraw N33bn from pension savings – PenCom

 The National Pension Commission has disclosed that 23,673 disengaged workers withdrew a total of N33.43bn from their Retirement Savings Accounts in the third quarter of 2024.

The withdrawals were made under the provisions of the contributory pension scheme, which allows workers who lose their jobs to access up to 25 per cent of their pension savings after four months of unemployment.

Data from the latest Pension Industry Information Dashboard for Q3 2024 shows a decline in the number of unemployed contributors withdrawing from their pension savings compared to previous years.

In 2023, 39,470 contributors withdrew N35.48bn, reflecting a significant drop in the number of applicants and the total amount accessed in 2024.

In 2022, 40,707 unemployed contributors withdrew N27.78bn, while in 2021, 40,858 individuals accessed N20.86bn.

In 2020, 31,716 workers withdrew N17.39bn, showing a steady increase in withdrawals before the decline in 2024.

However, the figure for 2024 was as of September, which means that the figure may likely increase by the end of the year.

Since the inception of the contributory pension scheme, a total of 176,424 disengaged workers have accessed their pension savings, withdrawing a cumulative N134.94bn.

On this type of withdrawal, PenCom noted, “Any employee who voluntarily retires, disengages or is disengaged from employment before the age of 50 years and wishes to withdraw an amount not exceeding 25 per cent of his RSA balance shall only do so after four months if he/she is unable to secure another employment.”

The report also highlighted continued growth in pension participation, with the number of registered Retirement Savings Accounts reaching 10,536,088 as of the third quarter of 2024.

This marks a 13.93 per cent increase over the past five years, up from 9,215,788 in Q4 2020.

In the year-to-date period for 2024, 118,339 new RSA registrations were recorded, reflecting increasing awareness and adoption of the pension scheme.

The data further revealed that 61 per cent of RSA holders are male, while 38 per cent are female, indicating a gender gap in pension enrolment.

Cumulative pension contributions since the launch of the contributory pension scheme stood at N10.97tn as of the third quarter of 2024.

The public sector accounted for N5.71tn, while the private sector contributed N5.25tn.

Public sector pension contributions have risen from N3.43tn in 2019 to N5.71tn in 2024, while private sector contributions increased from N3.27tn to N5.25tn over the same period.

The steady rise in contributions highlights the continued expansion of the pension industry and increased compliance with pension remittance regulations, although concerns persist about some employers failing to meet their obligations.

The report also showed that total lump sum payments for retirees stood at N504.86bn, while monthly programmed withdrawals amounted to N5.70bn as of Q3 2024.

In the Retiree Life Annuity scheme, which provides pension payments through insurance companies, total premiums paid reached N689.4bn.

The annuity system continues to serve as a financial buffer for retirees, ensuring regular payouts.

The en-bloc pension withdrawal option, which allows retirees with low RSA balances to withdraw their entire savings at once, recorded 11,330 retirees withdrawing N26.85bn in the third quarter of 2024.

This highlights the challenge of low pension balances, particularly among informal sector workers and those with irregular contributions.

The Micro Pension Plan, designed for informal sector workers, recorded 164,031 participants as of Q3 2024.

The total amount saved in micro pensions stood at N967.19m, marking an increase of N878.07m from the 2020 figure of N89.13m.

The number of informal sector workers with funded RSAs was 12,241, showing slow but steady growth in this segment.

The pension system has also seen increased flexibility, as RSA holders are now allowed to transfer their pension accounts from one Pension Fund Administrator to another.

As of Q3 2024, 289,545 RSA transfers had been processed, with N1.26tn transferred since the inception of the scheme.

In 2024 alone, 67,146 RSA holders switched PFAs, transferring N391.61bn, showing that contributors are actively seeking better returns and service providers for their retirement savings.

The report also detailed payments related to accrued pension rights, which cover government employees who were in service before the contributory pension scheme commenced in 2004.

In 2023, 14,873 beneficiaries received N61.71bn, while 11,551 beneficiaries were paid N54.66bn in 2022.

Over the past four years, the government has disbursed N236.54bn in accrued rights payments.

The pension industry also recorded N82.22bn in death benefits paid to the beneficiaries of deceased RSA holders in Q3 2024.

Voluntary contributors withdrew N54.98bn during the period. Under a separate provision, RSA holders can use a portion of their pension savings for mortgage equity contributions.

As of Q3 2024, 9,080 RSA holders had used N79.74bn for this purpose, enabling them to apply part of their pension balance towards homeownership.