The Organised Private Sector of Nigeria (OPSN) has urged the Federal Government and the National Pension Commission (PenCom) to suspend plans to increase mandatory pension contributions.

The organised private sector, in a statement on Thursday in Lagos, warned that the proposal could harm workers, businesses and the economy.

OPSN comprised the Manufacturers Association of Nigeria (MAN), the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), and the Nigeria Employers’ Consultative Association (NECA).

It also included the Nigerian Association of Small and Medium Enterprises (NASME), the Nigerian Association of Small Scale Industrialists (NASSI), and 25 sectoral employer associations.

The group described the proposed increase in pension contributions and the introduction of an additional mandatory annual contribution equivalent to three per cent of the total wage bill as a “Greek gift” to workers.

It said that although the proposal was aimed at improving retirement benefits, it could result in job losses, slower wage growth, rising production costs and increased business closures if implemented under current economic conditions.

Speaking on behalf of the group, the Director-General of NECA, Adewale-Smatt Oyerinde, said that OPSN supported efforts to strengthen Nigeria’s pension system.

Mr Oyerinde, however, insisted that any adjustment must follow extensive consultations with relevant stakeholders.

According to him, announcing an increase while consultations are still ongoing undermines the credibility of the engagement process.

He said that previous pension contribution reviews were preceded by broad consultations involving government, employers, organised labour and other stakeholders.

Mr Oyerinde said that any proposal should be backed by credible actuarial, economic and employment impact assessments.

He said that under the Pension Reform Act 2014, the minimum pension contribution already stood at 18 per cent of an employee’s monthly emoluments, comprising 10 per cent from employers and eight per cent from employees.

Mr Oyerinde said that the current contribution rate compared favourably with international standards and should not be increased without evidence that it was inadequate.

Also speaking, the Director-General of MAN, Segun Ajayi-Kadir, said that businesses were already grappling with high energy costs, exchange rate volatility, high interest rates, weak consumer demand and multiple regulatory obligations.

Mr Ajayi-Kadir warned that imposing additional payroll costs could force employers to reduce recruitment, delay salary reviews, cut jobs, increase outsourcing or transfer the additional costs to consumers through higher prices.

Similarly, the Director-General of NACCIMA, Sola Obadimu, said that introducing another statutory financial obligation could undermine the Federal Government’s ongoing economic reforms aimed at improving business competitiveness.

Mr Obadimu said that reforms should be evaluated based on their overall impact on employment, investment, business survival and inflation.

The Director-General of NASSI, Ifeanyi Oputa, said that micro, small and medium-sized enterprises would be the worst affected because many were already struggling with rising operating costs and limited access to finance.

Mr Oputa said that the proposed increase could push more businesses into the informal sector and reduce compliance with the pension scheme.

The organised private sector urged the government to prioritise reducing inflation, preserving workers’ purchasing power and promoting business sustainability instead of increasing employment costs.

The group also called for a comprehensive economic and employment impact assessment and genuine social dialogue before any review of pension contribution rates.

It maintained that no adjustment should be introduced without considering its implications for jobs, wages, enterprise sustainability and economic growth.

OPSN reiterated its support for reforms that would strengthen retirement security but insisted that a sustainable pension system must be built on thriving businesses.

It also said that a sustainable pension system must be built on growing formal employment rather than increased financial burdens on employers and workers. 

(NAN)