The Organised Private Sector of Nigeria has expressed deep concern over the recent announcement by the Director-General of the National Pension Commission regarding a proposed increase in mandatory pension contributions and the introduction of an additional three per cent mandatory annual contribution equivalent to three per cent of the total wage bill.
The OPSN members include the Manufacturers Association of Nigeria, the National Association of Chambers of Commerce, Industry, Mines and Agriculture, the Nigeria Employers’ Consultative Association, the Nigerian Association of Small and Medium Enterprises, the Nigerian Association of Small Scale Industrialists, and 25 sectoral employer associations.
In a statement on Thursday jointly signed by MAN, NACCIMA, NECA, NASME and NASSI, the OPSN described the proposed hike as both premature and counterproductive.
While the proposal may be presented as an effort to improve retirement benefits, the OPSN warned that, under the prevailing economic conditions, it could become a “Greek gift” to Nigerian workers, “an apparently beneficial policy that ultimately threatens employment, wage growth, business sustainability and escalates compliance risks.”
The OPSN maintained that the strength of any contributory pension system depends fundamentally on the survival of businesses, the availability of decent jobs and the capacity of employers and employees to make consistent contributions.
“Under the Pension Reform Act 2014, Nigeria’s minimum pension contribution already stands at 18 per cent of an employee’s monthly emoluments, comprising 10 per cent from the employer and 8 per cent from the employee. This is broadly comparable with the OECD average effective mandatory pension contribution rate of 18.8 per cent at the average-wage level in 2024.
“Nigeria’s existing contribution rate therefore cannot reasonably be regarded as inadequate, based on contribution percentages alone. Any proposal for an increase must be supported by Nigeria-specific actuarial evidence demonstrating that the current rate is insufficient and that a higher rate would not undermine employment, wages, compliance and enterprise sustainability,” the statement read in part.
Speaking in Lagos, the Director-General of NECA, Mr Adewale-Smatt Oyerinde, emphasised that the proposed hike is both premature and counterproductive.
“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 and reducing subsequent stakeholder engagements to a mere formality,” Oyerinde said.
He stressed that previous adjustments to pension contribution rates were preceded by extensive engagement among government, employers, organised labour and other relevant stakeholders.
“Any proposed adjustment must be supported by credible actuarial, economic and employment-impact assessments. It must also emerge from genuine and transparent social dialogue. Retirement security should not be pursued in a manner that threatens the businesses and jobs upon which the pension system itself depends,” he stated.
Elaborating on the macroeconomic consequences, the Director-General of MAN, Mr Segun Ajayi-Kadir, highlighted the direct threat to enterprise viability and worker earnings.
“Businesses are already contending with high energy costs, elevated interest rates, exchange rate volatility, multiple regulatory obligations, weak consumer demand and rising production expenses. Imposing an additional statutory payroll cost without a comprehensive impact assessment will place further pressure on already struggling enterprises,” Ajayi-Kadir said.
He explained that higher employment costs could compel businesses to slow recruitment, postpone wage reviews, reduce staff strength, increase outsourcing, suspend expansion plans or pass additional costs to consumers through higher prices.
“The proposed increase may 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.
Highlighting the contradiction with broader fiscal policies, the Director-General of NACCIMA, Mr Sola Obadimu, warned against imposing additional financial levies on a struggling business environment.
According to him, at a time when businesses are struggling to recover from prolonged economic pressures and the Federal Government is implementing reforms intended to improve competitiveness, “imposing another statutory financial obligation on employers could undermine the benefits of those reforms.”
He maintained that government policies must be properly coordinated and evaluated based on their cumulative impact on businesses.
“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,” he stated.
The Director-General of NASSI, Ifeanyi Oputa, stressed that micro, small and medium-sized enterprises would be disproportionately affected by any increase in mandatory employer pension contributions.