Economic hardship forces 14,179 sacked Nigerian RSA holders to withdraw N23.4bn from retirement savings

Business a.m.

As Nigeria’s economy continues to endure a period of instability, the country’s job market has taken a significant hit, leading to a growing number of Nigerian Retirement Savings Account (RSA) holders who have lost their jobs resorting to pension withdrawals to support themselves and their families during this trying time.

According to data from the National Pension Commission (PenCom), 14,179 RSA holders withdrew a total of N23.4 billion, representing 25 percent of their pension savings, in the first half of 2024 alone, as they struggled to cope with the financial challenges brought on by job losses in the midst of a difficult economic climate.

The PenCom report, despite noting a decline in the pace of withdrawals in the second quarter of the year, serves as a reminder of the protracted struggle many Nigerian RSA holders continue to endure due to the country’s economic challenges.This is as a total of 5,528 RSA holders withdrew N9.2 billion from their pension savings in Q2’24.

According to some industry observers, the higher number of withdrawals in Q1’24, which amounted to N14.2 billion, was largely attributed to the usual financial pressures that arise at the beginning of each year, putting further strain on individuals and families as they manage their expenses.

The PenCom report  showed that the total of 5,528 RSA holders who withdrew N9.2 billion during the second quarter of the year were predominantly from the private sector, with 5,223 applicants hailing from private organisations, and the remaining 305 applicants from the public sector.

Furthermore, N9.3 billion was approved for the 5,528 RSA holders under the age of 50 years, highlighting the far-reaching impact of the economic turmoil on Nigeria’s younger workforce, particularly those in the private sector who may have been disproportionately affected by job losses.

With regards to residential mortgage financing, the PenCom report indicated that a total of 1,390 RSA holders requested access to up to 25 percent of their RSA balances during the quarter under review, to contribute towards the equity payments for their residential mortgages. Of the 1,390 requests, 1,234 were approved, amounting to N10.5 billion in total. 

However, 156 requests were rejected due to incorrect documentation, indicating the importance of accurate paperwork and the potential impact on individuals seeking access to their pension savings for important financial transactions such as mortgage payments.

“Out of the 1,234 applicants whose benefits were approved, 379 were from the private sector, while the remaining 855 were from the public sector,” the report stated. 

The report further disclosed that a total of 4,387 individuals applied for the death benefits of deceased employees or retirees, with 4,376 requests being approved and 11 rejected due to incorrect documentation. The breakdown of the approved requests indicated that 807 came from the private sector, while the remaining 3,569 were from the public sector.

Overall, a total of N29,318.98 million was approved for the 4,376 beneficiaries.