NLC Calls for Increased Retirement Lump Sum to 50% under Contributory Pension Scheme

 

The Nigeria Labour Congress (NLC) has called for an increase in the lump sum payment on retirement to 50% under the Contributory Pension Scheme (CPS). This demand aims to ensure that retirees can begin their post-service lives comfortably.

NLC President Joe Ajaero raised several critical questions that concern retiring workers at a recent program on retirement in Abuja. He highlighted the uncertainties retirees face, such as whether their pensions will be paid promptly after leaving service, how they will manage financially once their salaries stop, and whether their pensions will retain their value in terms of purchasing power and cover basic needs consistently.

Ajaero emphasized the pressing fears that the current pension system should address but often exacerbates, turning retirement, which should be a period of joy and rest, into a daunting prospect for many. He cited issues such as inadequate pension benefits, inflation eroding the value of fixed pension incomes, and the failure of pension schemes to properly index for cost of living increases.

"For instance, retirees who had saved up to N10 million in their Retirement Savings Account (RSA) before 2023 have seen this value drop to around N3 million in real terms – a situation that is unacceptable," Ajaero said. He also noted the problems of delayed pension payments, inconsistent policy implementation, and the lack of support for informal economy workers.

To address these challenges, Ajaero demanded the strengthening and reforming of the pension system to ensure timely and adequate payments and enhance transparency in pension governance to reduce looting. He also called for policies to index pension benefits to inflation and the cost of living, expand social support systems to include affordable healthcare, housing, and community services, and enhance financial literacy programs for retirees.

Additionally, Ajaero emphasized the need for policies to integrate informal sector workers into the pension framework and standardize pension policy implementation across all sectors and regions.

"More importantly, there is an urgent need to increase the percentage of lump sum payment on retirement to 50% and expand the investment windows available beyond housing via mortgage arrangements to allow for more investment options for workers to use their RSAs while in service," he concluded.

This call for reforms aims to address the life-changing challenges Nigerian workers face before and during retirement, ensuring that retirees can enjoy a comfortable and secure post-service life.