Employees facing economic hardship are increasingly tapping into their pension savings held in Retirement Savings Account (RSA) due to financial difficulties, as indicated by recent findings.
Vanguard’s investigation reveals that in the first quarter of 2023 (Q1’23), RSA account holders under the Contributory Pension Scheme (CPS) withdrew a total of N3.02 billion from their Additional Voluntary Contribution (ADV). This amount marks a significant 240.1 percent increase from the N887.9 million recorded in the fourth quarter of 2022 (Q4’22).
According to the report from the National Pension Commission (PenCom) for Q1’23, the number of RSA holders making withdrawals from their ADV rose quarter-on-quarter (QoQ) to 1117 during the period, representing a 94.6 percent increase from the 574 withdrawals in the preceding quarter (Q4’22).
Additional Voluntary Contributions (ADV) are supplementary funds that workers can choose to add to their mandatory pension contributions, serving as additional retirement savings.
Under the Pension Reform Act (PRA) 2014, employees are allowed to make ADV contributions to their RSA in addition to their compulsory pension contributions, with the aim of enhancing their retirement benefits.
In terms of RSA registrations, Stanbic IBTC maintained the largest market share of 28 percent with 23,586 new registrations during Q1’23. Access Pensions Limited followed with an 11 percent market share and 9,546 new registrations, while ARM Pension Managers Limited ranked third with a 9.2 percent market share and 9,546 new registrations.
On the other hand, NPF Pensions Managers and Nigerian University Pension Management Company had lower numbers of new RSAs with only 131 and 179 respectively, representing a small fraction of total registrations. Guaranty Trust Pensions Managers Limited recorded 879 new RSAs, accounting for 1.1 percent of total registrations.