Employers oppose pension contribution hike, warn of job losses

The Organised Private Sector of Nigeria (OPSN) has opposed the Federal Government’s proposed increase in mandatory pension contributions, warning that the move could lead to job losses, weaker wage growth and increased pressure on businesses.

In a statement jointly signed by the Manufacturers Association of Nigeria (MAN), the National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), the Nigeria Employers’ Consultative Association (NECA), the Nigerian Association of Small and Medium Enterprises (NASME), the Nigerian Association of Small Scale Industrialists (NASSI) and other employer groups, the OPSN described the proposal as premature and counterproductive.

The employers’ group was reacting to plans by the National Pension Commission (PenCom) to review the Pension Reform Act 2014 by increasing the current mandatory pension contribution rate and introducing an additional three per cent annual contribution equivalent to three per cent of employers’ total wage bills.

According to the OPSN, Nigeria’s existing mandatory pension contribution of 18 per cent—comprising 10 per cent from employers and eight per cent from employees—is already comparable to international standards and should not be increased without credible actuarial and economic evidence.

The Director-General of NECA, Adewale-Smatt Oyerinde, said any review should emerge from transparent consultations and be supported by comprehensive assessments of its impact on employment, businesses and the economy.

Similarly, MAN Director-General, Segun Ajayi-Kadir, warned that businesses were already struggling with high energy costs, exchange rate volatility, rising production expenses and weak consumer demand, adding that additional payroll obligations could force companies to reduce recruitment, delay salary reviews, cut jobs or transfer higher costs to consumers.

NACCIMA Director-General, Sola Obadimu, also cautioned that imposing new financial obligations on employers could undermine the Federal Government’s ongoing economic reforms, stressing that policies should be evaluated based on their cumulative impact on businesses and investment.

For small businesses, NASSI Director-General, Ifeanyi Oputa, said the proposal could threaten the survival of micro, small and medium-sized enterprises, deepen non-compliance and push more businesses into the informal sector.

The OPSN urged the Federal Government and PenCom to prioritise tackling inflation, preserving workers’ purchasing power and supporting business sustainability before introducing any increase in pension contributions.

The group called for a comprehensive economic and employment impact assessment and insisted that any future adjustment should only follow genuine consultations with employers, organised labour and other stakeholders.

PenCom had earlier announced plans to amend the Pension Reform Act 2014 to strengthen retirement security for Nigerian workers, saying consultations with organised labour, employers, pension operators and the National Assembly were ongoing before any proposal would be submitted for legislative approval.