The majority of Nigeria’s senior citizens may die without benefitting from pensions. An analysis of the Pension Asset and Membership Data and the Labour force statistics reveal over 90 per cent of Nigerian workers are not on any pension scheme.
The Pension Asset and Membership Data for Q1 2019 showed that only 8.56 million workers out of the 90.47 million labour force population were covered by any pension scheme. The plights of the Nigerian labour force remain a critical welfare challenge which beckons government’s attention for the social security of its vulnerable citizens such as pensioners.
For senior citizens, there are three complementary sources of income after retirement, which are pensions, personal savings and social benefits. However, the reality is that Nigerian senior citizens might not be able to sustain themselves if they belong to the 90 percent of Nigerian workers who are not on any pension scheme, who also cannot save because they earn below the subsistence wage, who, most or all of their active years, have endured economic exploitation, and who are without any old age social benefits.
Growing Pension Assets: The richer the better
According to the April 2019 data from the Nigeria Bureau of Statistics (NBS), Nigeria’s pension assets increased by ten percent from N8.23 trillion ($22.86 billion) in June 2018 to N9.03 trillion ($25.10 billion) in March 2019. The new figure is equivalent to over 25% of Nigeria’s GDP of N31.79 trillion ($88.31 billion) in the first quarter of 2019.
Analysis showed that the Retirement Savings Accounts (RSA) alone contributed 75% and 76% of the funds in the second quarter of 2018 and first quarter of 2019 respectively while the sum of funds from both the Closed Pension Fund Administration (CPFA) and Authorised Existing Scheme (AES) reduced from 25% to 24% of pension assets within the period.
As at June 2018, the federal government securities alone made up 70% of these assets held in various investment portfolios with distant trails by local money market securities and domestic ordinary shares at 8.9% and 8.6% respectively.
These funds were held in trust for 8.14 million (8,136,202) contributing active and retired workers as at June 2018, a number which increased by 5% to 8,569,037 in March 2019. But overall, women still made up less than 30% of all RSA holders in the two periods. Also, the private sector has a bigger share of employees on pension plans, while the state governments have the least, going by the number of their staff with an RSA.
Official data from Pencom reveals that as at December 2018, 99% of pension account holders were on the RSA scheme, with a total of 8,410,184 persons, while the CPFA pension scheme had the lowest membership with 23,332 persons. The AES pension scheme still retained 40,951 members, bringing the total membership of various pension schemes in Nigeria to 8,474,467.
Growing Pensioners: The older the poorer
In Nigeria, only 4% of persons aged 65 and above who served or still serve both in the private and public sector are on any pension scheme, going by 2018 December Pencom figures and a 2017 projection of NBS population estimates. Unfortunately, this is the case in a country where there is no social security plan for the retired, elderly and unemployed, except the social pension initiative of 5,000 naira in Ekiti State and 10,000 Naira in Osun State which started in 2011 and 2012 respectively and targeted only elders resident in the states.
Coupled with the present challenge of continuity and sustainability, especially in Osun State, the two schemes in Osun and Ekiti only cover 1,602 and 25,000 senior citizens respectively, and both amount to 0.4% per cent of the entire elderly population in Nigeria.
Though contributory pension scheme is the main safety net for the elders in the country, going by the National Pension Commission report (Pencom) figures for December 2018, the pension coverage for age 65 and above in Nigeria is the lowest globally, when compared to the averages in the West Africa region, sub-Saharan Africa and the rest of the world.
This critically low support system for senior citizens is first a continuum of the generally low trend in pension coverage for all workers, which stood at 16% in June 2018. Besides this is the fact that life expectancy in Nigeria is below 60 years, and so many pensionable workers do not live up to age 65. This is likely due to the following causes:
The elderly are more susceptible to die as a result of these deadly diseases, especially the non-communicable ones such as Stroke, Coronary heart diseases, Liver diseases, Diabetes, and Prostate cancer, among others, due to the lack of a pension income after retirement to fund their general welfare and healthcare, or inadequacy of their pension savings to sustain their pre-retirement expenditure levels.