The Organised Private Sector of Nigeria (OPSN) has rejected the Federal Government’s proposal to increase mandatory pension contributions, describing the move as premature and potentially harmful to businesses and workers.
The OPSN, whose members include the Manufacturers Association of Nigeria (MAN), National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Nigeria Employers’ Consultative Association (NECA), Nigerian Association of Small and Medium Enterprises (NASME) and Nigerian Association of Small Scale Industrialists (NASSI), also opposed the proposed additional annual contribution of three per cent of employers’ total wage bills.
In a joint statement issued on Thursday, the groups argued that while the proposal is intended to improve retirement benefits, it could instead lead to job losses, slower wage growth, increased business costs and reduced compliance.
The OPSN noted that under the Pension Reform Act 2014, employers currently contribute 10 per cent of an employee’s monthly emoluments, while employees contribute 8 per cent, bringing the total mandatory pension contribution to 18 per cent. It said this is already close to the 18.8 per cent OECD average for mandatory pension contributions in 2024.
According to the employers, any increase should only be considered after credible actuarial and economic studies show that the current contribution level is inadequate and that a higher rate would not negatively affect employment or business sustainability.
Speaking in Lagos, NECA Director-General, Adewale-Smatt Oyerinde, said announcing a contribution increase before concluding consultations with stakeholders undermines the consultation process. He stressed that previous pension reforms followed extensive discussions involving government, employers and organised labour.
Also commenting, MAN Director-General, Segun Ajayi-Kadir, warned that businesses are already struggling with rising energy costs, high interest rates, exchange rate volatility, multiple taxes and weak consumer demand. He said imposing additional payroll costs could force companies to reduce recruitment, delay salary reviews, cut jobs, suspend expansion plans or pass the extra costs on to consumers through higher prices.
Similarly, NACCIMA Director-General, Sola Obadimu, said introducing new financial obligations on employers could weaken the impact of the Federal Government’s economic reforms aimed at improving competitiveness.
For his part, NASSI Director-General, Ifeanyi Oputa, said micro, small and medium-sized enterprises would be disproportionately affected, warning that higher mandatory contributions could push more businesses into the informal sector and reduce compliance with pension regulations.
The OPSN urged the Federal Government and the National Pension Commission (PenCom) to focus on tackling inflation, supporting business growth and preserving jobs before introducing any increase in pension contributions.
The employers also called for a comprehensive assessment of the proposal’s impact on employment, wages, investment, inflation and business sustainability, insisting that any future changes should only follow transparent consultations with all stakeholders.
Earlier this year, PenCom announced plans to review the Pension Reform Act 2014 and increase the mandatory pension contribution above the current 18 per cent, saying the proposal is part of wider reforms to improve retirement security. The commission added that consultations with organised labour, employers, pension operators and the National Assembly are still ongoing before any amendment is presented for legislative approval.
