Pension turns lifeline as jobless Nigerians withdraw N12bn to survive

Nigeria’s worsening employment and economic challenges are forcing thousands of workers to fall back on their retirement savings for immediate survival, with more than N12 billion withdrawn from pension accounts by unemployed contributors in just three months.

Data released by the National Pension Commission (PenCom) shows that 8,082 workers who lost their jobs accessed a combined N12.11 billion from their Retirement Savings Accounts (RSAs) in the fourth quarter of 2025. This is in line with a provision in the Pension Reform Act 2014, which allows contributors who have been unemployed for at least four months to withdraw up to 25 percent of their pension balances.

A breakdown of the data further reveals that workers from the private sector accounted for the overwhelming majority of withdrawals. About 96 percent of those who accessed their pension funds after job loss came from private sector employment, while only four percent were from the public sector.

The trend underscores the vulnerability of private sector workers to economic disruptions, business closures, downsizing and restructuring exercises that have intensified across several industries as companies grapple with rising operating costs, currency volatility and weak consumer spending, says Chika Onwumali, partner at Premium Debate.

It also highlights the growing role of pension savings as a social safety net amid rising unemployment, inflationary pressures and declining household incomes, Onwumali said.

While the withdrawal provision offers temporary relief to displaced workers, pension experts warn that repeated reliance on retirement savings for immediate consumption could undermine long-term retirement security.

According to pension operators, the N12.11 billion withdrawn in the quarter represents money originally intended to provide income during old age. Each withdrawal reduces the contributor’s retirement nest egg and may ultimately affect the adequacy of pension benefits at retirement unless contributors can rebuild their balances after returning to work

Analysts note that the rising number of unemployed contributors accessing pension funds reflects broader economic realities facing Nigerian households. With inflation continuing to erode purchasing power and many families struggling to meet basic living expenses, retirement savings are increasingly becoming emergency funds rather than long-term financial security instruments.

The average withdrawal per beneficiary stood at approximately N1.5 million, highlighting the significant dependence of affected workers on pension assets to bridge income gaps during periods of unemployment.

Further analysis of the Fourth Quarter data from the commission shows approved benefits for nearly 22,000 retirees and beneficiaries amounting to approximately N155 billion across various payment categories.

Programmed Withdrawal and Retiree Life Annuity remained the dominant retirement payout options, accounting for the largest share of pension benefits approved during the period.

Programmed Withdrawal recorded 9,398 approvals involving over N51 billion in lump-sum and monthly payments, with public-sector retirees accounting for more than 73 percent of beneficiaries.

Retiree Life Annuity, which recorded 4,584 approvals and more than N82 billion in total payments comprising premiums, lump sums, and monthly pensions, maintained a strong position among retirees. Nearly 78 percent of annuity beneficiaries came from the public sector, reinforcing confidence in the insurance-backed retirement income model.

Beyond retirement income, the pension system’s social protection role became evident through death benefit payments, as a total of 2,141 beneficiaries received N21.53 billion in death benefits during the quarter, with public-sector workers accounting for over 72 percent of the approvals.

However, beneath the encouraging retirement and protection statistics lies a more troubling trend. The industry recorded 7,927 en-bloc payments valued at N10.65 billion. These payments are made when retirement savings account balances are too small to support periodic pension payments. With nearly 84 percent of beneficiaries coming from the private sector, the figures point to a persistent challenge of pension adequacy among private-sector workers.

At the end of April 2026, Nigeria’s pension assets have risen to N30.94 trillion with 11, 232,192 registered contributors under the Contributory Pension Scheme (CPS).

The growth over the years, according to Omolola Oloworaran, director general of PenCom, reflected the sustained success of the country’s pension reform implemented since 2004.

She said the industry’s growth has been driven by consistent regulatory reforms, stronger governance standards and enhanced supervisory mechanisms designed to protect contributors’ funds and improve retirement outcomes. (BusinessDay)