OPSN rejects proposed pension contribution hike, warns of job

The Organised Private Sector of Nigeria (OPSN) has expressed deep concern over a proposal by the National Pension Commission (PenCom) to increase mandatory pension contributions, including introducing an additional 3% mandatory annual contribution equivalent to 3% of total wage bills.

The OPSN—an umbrella body representing the Manufacturers Association of Nigeria (MAN), NACCIMA, NECA, NASME, NASSI, and 25 sectoral employer associations—warned that while framed as a benefit for retirees, the policy under current economic realities is a “Greek gift” that threatens employment, wage growth, and enterprise survival.

Under the Pension Reform Act 2014, Nigeria’s minimum contribution rate stands at 18% of monthly emoluments (10% from employers, 8% from employees). The OPSN pointed out that this is broadly aligned with the OECD average of 18.8% for average-wage earners in 2024.

The group maintained that Nigeria’s rate cannot be considered inadequate based on percentages alone, insisting that any proposed increase must be backed by Nigeria-specific actuarial evidence demonstrating both necessity and economic viability.

Director-General of NECA, Adewale-Smatt Oyerinde, criticised PenCom for announcing proposed rate increases while stakeholder consultations were still ongoing.

“Announcing rate increases during ongoing consultations risks prejudging the outcome and reducing stakeholder engagement to a mere formality. Previous adjustments were preceded by extensive social dialogue among government, employers, organised labour, and other key players. Retirement security must not be pursued in a way that destroys the very jobs and businesses funding the system,” Oyerinde said.

Highlighting the macroeconomic pressure on businesses, Director-General of MAN, Segun Ajayi-Kadir, cautioned that imposing additional payroll costs without an impact assessment will severely burden struggling enterprises.

“Businesses are already battling high energy costs, elevated interest rates, exchange-rate volatility, and weak consumer demand. Higher employment costs will force companies to slow recruitment, freeze wage reviews, reduce staff, or pass costs on to consumers through higher prices. Workers will ultimately pay the price through weaker wage growth and job losses,” Ajayi-Kadir noted.

Director-General of NACCIMA, Sola Obadimu, emphasised that the proposal undermines ongoing federal tax and fiscal reforms meant to improve business competitiveness.

Addressing the impact on small businesses, Director-General of NASSI, Ifeanyi Oputa, warned that micro, small, and medium enterprises (MSMEs) would bear the brunt of the burden.

The OPSN called on the Federal Government and PenCom to pivot away from policies that erode purchasing power and focus instead on macroeconomic stability.