Manufacturers, chambers of commerce and other business groups urge PenCom to suspend the plan, saying firms are already under severe economic pressure…..
Nigeria’s organised private sector has called on the National Pension Commission (PenCom) to halt plans to increase employers’ mandatory pension contributions, warning that the proposal could place additional financial strain on businesses, slow job creation and weaken workers’ earnings.
The appeal was made in a joint statement issued by the Organised Private Sector of Nigeria (OPSN), a coalition comprising 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), alongside 25 other employer associations.
The groups were reacting to recent comments by PenCom Director-General, Omolola Oloworaran, on plans to amend the Pension Reform Act (PRA) 2014 to increase the statutory pension contribution paid by employers.
Under the current pension arrangement, employers contribute 10 percent of an employee’s monthly earnings, while employees contribute eight percent, bringing the total mandatory pension contribution to 18 percent.
According to the OPSN, Nigeria’s contribution rate is already broadly in line with international standards, noting that the Organisation for Economic Co-operation and Development (OECD) records an average mandatory contribution rate of about 18.8 percent.
Speaking on behalf of the coalition, NECA Director-General, Adewale-Smatt Oyerinde, said employers remain committed to strengthening Nigeria’s pension system but insisted that any review of contribution rates must be based on broad consultations and credible evidence.
He argued that publicly suggesting an increase before stakeholder engagements have been concluded could undermine the consultation process and create the impression that the outcome has already been decided.
Oyerinde recalled that previous adjustments to pension contributions followed extensive discussions involving government, employers and organised labour, adding that any future review should equally be supported by detailed actuarial studies and comprehensive assessments of its economic and employment implications.
He said policymakers must carefully evaluate how a higher contribution rate would affect investment, business sustainability, wages, employment levels and overall compliance before taking a final decision.
Echoing those concerns, Director-General of MAN, Segun Ajayi-Kadir, said manufacturers are already battling multiple economic challenges, including rising energy costs, high borrowing rates, exchange-rate volatility, mounting regulatory obligations and weak consumer demand.
He warned that introducing another statutory payroll obligation at a time when businesses are struggling could further weaken the manufacturing sector and discourage expansion.
According to Ajayi-Kadir, higher labour costs may compel employers to slow recruitment, postpone salary increases, reduce workforce numbers, rely more heavily on outsourcing or suspend planned investments.
He added that businesses facing increased operating costs may ultimately transfer part of the burden to consumers through higher prices for goods and services.
While employees may not bear the direct cost of an increase in employers’ contributions, he argued that they could still be affected through slower wage growth, fewer employment opportunities and a weaker labour market.
NACCIMA Director-General, Sola Obadimu, also cautioned that the proposal could undermine the Federal Government’s broader efforts to improve Nigeria’s business environment and attract investment.
He stressed that pension reforms should be evaluated not only by their impact on retirement savings but also by their wider effects on employment, inflation, investment, business survival and economic competitiveness.
Similarly, NASSI Director-General, Ifeanyi Oputa, warned that micro, small and medium-sized enterprises (MSMEs) would be among the hardest hit by any increase in statutory pension obligations.
According to him, additional financial burdens could threaten the survival of many small businesses, discourage formal employment and increase the number of firms operating outside the formal economy.
The OPSN therefore urged the Federal Government and PenCom to suspend the proposed increase until economic conditions become more favourable.
The coalition also called for a comprehensive assessment of the policy’s likely impact on employment, wages, inflation, investment and the sustainability of MSMEs before any changes are introduced.
It maintained that any future adjustment to pension contribution rates should only follow extensive consultations involving employers, organised labour and other key stakeholders to ensure that the reform strengthens retirement savings without placing undue pressure on businesses and the wider economy.
