In an apparent response to the severe economic crisis, the number of workers withdrawing voluntary contributions as part of their pension savings plans increased by 87.6% in the first quarter of 2024 (Q1 2024).
Specifically, the number of employees deducting voluntary contributions increased from 694 in the previous quarter (Q4 2023) to 1,302 in Q1 2024. The amount of funds deducted from voluntary contributions also increased by 160% to 3.9 billion naira compared to 1.5 billion naira in the previous quarter.
A breakdown in the first quarter report released by the National Pension Commission (Pencom) showed that 1,259 of the workers who made withdrawals were from the private sector and 43 were from the public sector. Voluntary contributions are additional funds that employees can voluntarily add to their mandatory pension contributions or simply set aside as retirement savings.
The Pension Reform Act of 2014 introduces an exciting opportunity for employees to supplement their mandatory pension contributions by making voluntary payments into their Retirement Savings Accounts (RSAs). This feature enables individuals to top up their retirement savings and ensure a more comfortable financial future after they leave the workforce.
The report states that “During the quarter, 1,302 RSA holders were given approval to access voluntary contributions of N3.9 billion, while 24 applications were rejected due to incorrect calculations. Of the RSA holders approved for benefits, 1,259 were from the private sector and 43 were from the public sector.”
Meanwhile, the report on applications from RSA holders to access pension savings for home loans stated that holders applied to access up to 25% of their RSA balances to pay equity contributions for home loans during the quarter.
One thousand two hundred and thirty-four applications worth N10.5 billion were approved while 156 were rejected due to insufficient documentation. Of the 1,234 applicants approved for grants, 379 were from the private sector while the remaining 855 were from the public sector, and 2024 people were enrolled across various sectors. Analysis of RSA registrations with PFAs reveals that Stanbic IBTC Pension Managers held the largest market share with 23.
9% of new registrations and 21,288 registered contributors, followed by Access Pensions Limited with 22.
5% and 20,042 registered new contributors.
This was followed by ARM Pension Managers Ltd, Leadway Pensure PFA, and Premium Pension, which accounted for 8.4%, 7.1%, and 7.0% of new registrations respectively in the quarter.
As a result, of the 89,061 new RSAs registered in Q1 2024, the top five PFAs collectively accounted for 68.8% and the bottom five PFAs collectively accounted for 4.3%.
