The Organised Private Sector of Nigeria (OPSN) has urged the Federal Government and the National Pension Commission (PenCom) to suspend plans to increase mandatory pension contributions.
The OPS group in a statement on Thursday cautioned that the proposed hike in pension contributions could harm workers, businesses and the economy.
The umbrella body of the OPS comprised the Manufacturers Association of Nigeria (MAN), the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), the Nigeria Employers’ Consultative Association (NECA), the Nigerian Association of Small and Medium Enterprises (NASME), the Nigerian Association of Small Scale Industrialists (NASSI), and 25 sectoral employer associations.
According to the OPSN, the proposed increase in pension contributions and the introduction of an additional mandatory annual contribution equivalent to three per cent of the total wage bill could be described as a Greek gift to workers.
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The groupp maintained that although the proposal was aimed at improving retirement benefits, it could cause job losses, slower wage growth, rising production costs and collapse of more businesses , if implemented under the current micro and macroeconomic conditions in the country.
Speaking on the proposed pension contributions hike, the Director-General of NECA, Mr Adewale-Smatt Oyerinde, said that OPSN supported efforts to strengthen Nigeria’s pension system, warning, however, that such increase must follow extensive consultations with relevant stakeholders.
Noting that previous pension contribution reviews were preceded by broad consultations involving government, employers, organised labour and other stakeholders, Oyerinde said that announcing an increase while consultations are still ongoing undermined the credibility of the engagement process.
According to him, any review proposal should be backed by credible actuarial, economic and employment impact assessments.
Oyerinde clarified that under the Pension Reform Act 2014, the minimum pension contribution already stood at 18 per cent of an employee’s monthly emoluments, comprising 10 per cent from employers and eight per cent from employees.
The NECA boss pointed out that the current contribution rate aligned with international standards and should not be increased without any justification of its inadequacy.
In his remarks, the Director-General of the MAN, Mr. Segun Ajayi-Kadir, complained that businesses in the country were already over-burdened by increasing energy costs, foreign exchange rate volatility, high lending rates, weakening consumer demand and other fiscal challenges.
The industrialist cautioned that any addition burden in terms of payroll costs as being contemplated by the PenCom could compel employers to cut jobs delay salary adjustments for workers, encourage outsourcing of labour and transfer the additional operational costs burden to the consumers with the attendant negative implications for the nation’s economic growth.
Also, the Director-General of NACCIMA, Mr. Sola Obadimu, said that introducing another statutory financial obligation on the labour force could undermine the Federal Government’s ongoing economic reforms, aimed at improving business competitiveness.
He stressed that any reform action on the pension contributions should be evaluated based on their overall impact on employment, investment, business survival and inflation.
