Nigeria’s organised private sector has called on the National Pension Commission (PenCom) to suspend its proposed increase in employers’ mandatory pension contributions, warning that the move could raise business costs, slow wage growth and threaten jobs.
The position was contained in a joint statement issued by the Organised Private Sector of Nigeria (OPSN), which includes 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), the Nigerian Association of Small Scale Industrialists (NASSI) and 25 other employer associations.
The groups were reacting to a proposal by PenCom Director-General, Omolola Oloworaran, to amend the Pension Reform Act (PRA) 2014 by increasing the statutory pension contribution paid by employers.
Currently, Nigeria’s mandatory pension contribution stands at 18%, with 10% contributed by employers and 8% by employees.
The OPSN noted that the existing contribution rate is already close to the 18.8% average mandatory pension contribution among member countries of the Organisation for Economic Co-operation and Development (OECD).
Speaking on behalf of the employers, NECA Director-General, Adewale-Smatt Oyerinde, said the private sector supports efforts to strengthen Nigeria’s pension system but questioned the timing of the proposal.
“The OPSN supports efforts aimed at strengthening Nigeria’s pension system and improving retirement outcomes for workers. However, announcing that contribution rates will increase while consultations are still ongoing risks prejudging the outcome of the process,” Oyerinde said.
He stressed that previous adjustments to pension contributions were preceded by extensive consultations involving government, employers and organised labour.
According to him, any proposed increase should be backed by comprehensive economic, actuarial and employment impact assessments.
The Director-General of MAN, Segun Ajayi-Kadir, also warned that manufacturers are already struggling with rising production costs, high energy prices, interest rates, exchange-rate volatility and weak consumer demand.
“Imposing an additional statutory payroll cost without a comprehensive impact assessment will place further pressure on already struggling enterprises,” Ajayi-Kadir said.
He cautioned that higher employment costs could lead businesses to reduce recruitment, delay salary increases, cut staff, outsource jobs or suspend expansion plans.
Ajayi-Kadir also warned that businesses may transfer the additional costs to consumers through higher prices.
“The proposed increase may not directly raise the existing employee contribution, but its wider consequences could still be borne by workers through weaker wage growth, reduced employment opportunities, job losses and higher prices of goods and services,” he added.
Similarly, NACCIMA Director-General, Sola Obadimu, argued that reforms should not focus only on retirement benefits without considering their broader economic impact.
“A reform cannot be considered successful merely because it promises improved retirement benefits. Its impact on employment, investment, wage growth, prices, compliance and business survival must also be carefully considered,” Obadimu said.
The Director-General of NASSI, Ifeanyi Oputa, warned that the proposal would place an even heavier burden on micro, small and medium-sized enterprises (MSMEs), many of which are already struggling to survive.
He said the additional statutory obligation could discourage formal employment and push more businesses into the informal sector.
The OPSN therefore urged the Federal Government and PenCom to suspend the proposed increase until economic conditions improve.
It also called for wider consultations with employers, organised labour and other stakeholders before any changes to pension contribution rates are implemented.
