The Organized Private Sector of Nigeria (OPSN) has opposed the proposed increase in mandatory pension contributions by the National Pension Commission (PenCom), warning that the move could worsen the burden on businesses, slow job creation and weaken workers’ purchasing power.
In a statement signed by its member organisations, including the Manufacturers Association of Nigeria (MAN), the Nigeria Employers’ Consultative Association (NECA), the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), the Nigerian Association of Small and Medium Enterprises (NASME), and the Nigerian Association of Small Scale Industrialists (NASSI), the group described the proposal as a “Greek gift”—a policy that appears beneficial but could ultimately harm workers and employers.
The OPSN was reacting to comments by PenCom Director-General Omolola Oloworaran on plans to raise the current mandatory pension contribution and introduce an additional annual contribution equivalent to three per cent of an employer’s total wage bill.
According to the group, Nigeria’s existing pension contribution rate of 18 per cent—10 per cent from employers and eight per cent from employees—is already comparable to international standards. It argued that any increase should be backed by comprehensive actuarial and economic studies proving that the current rate is inadequate and that higher contributions would not negatively affect employment or business sustainability.
The private sector also criticised the manner in which the proposal was announced, saying it created the impression that consultations with stakeholders had already been concluded.
NECA Director-General Adewale-Smatt Oyerinde said announcing an increase while discussions were still ongoing undermined the consultation process and risked reducing stakeholder engagement to a mere formality. He stressed that previous pension reforms followed extensive dialogue among government, employers, organised labour and other stakeholders.
The OPSN further warned that businesses are already grappling with inflation, high energy costs, elevated interest rates, exchange rate volatility and multiple regulatory obligations.
MAN Director-General Segun Ajayi-Kadir said adding another statutory payroll cost could force employers to delay recruitment, reduce staff strength, postpone salary reviews, suspend expansion plans or transfer the additional costs to consumers through higher prices.
NACCIMA Director-General Sola Obadimu also argued that the proposal contradicts ongoing government efforts to improve the business environment, noting that imposing fresh financial obligations on employers could undermine broader economic reforms aimed at boosting competitiveness.
On the impact on smaller businesses, NASSI Director-General Ifeanyi Oputa warned that micro, small and medium-sized enterprises, already struggling with rising operating costs and limited access to finance, could be pushed further into informality if the proposal is implemented.
The OPSN urged the Federal Government and PenCom to prioritise tackling inflation, preserving workers’ purchasing power and supporting business growth before considering any increase in pension contributions.
It also called for a comprehensive economic and employment impact assessment to evaluate the likely effects of the proposal on jobs, wages, investment, inflation, business formalisation and the sustainability of MSMEs.
While reaffirming its support for reforms that strengthen Nigeria’s pension system, the group maintained that any adjustment to contribution rates should emerge from transparent consultations with stakeholders and only be considered when economic conditions improve.
The OPSN concluded that a sustainable pension system depends on thriving businesses and a growing formal workforce, warning that policies that increase the cost of employment without addressing current economic challenges could ultimately undermine both retirement security and economic growth.
