The Organised Private Sector of Nigeria has strongly opposed the Federal Government's proposed increase in pension contributions, warning that the move could lead to salary freezes, job losses, and higher prices for consumers. Business groups argue that the additional financial burden on employers would ultimately harm workers, despite the policy's intention to improve retirement benefits.
Employers warn of economic fallout
Under current regulations, 18 percent of every formal sector worker's monthly salary goes into a pension fund, with 10 percent contributed by the employer and 8 percent by the employee. The government now seeks to raise these contributions further, but employers say the timing is wrong and the process flawed.
A spokesperson for the business groups stated: "Imposing an additional statutory payroll cost without a comprehensive impact assessment will place further pressure on already struggling enterprises." They warned that companies unable to absorb higher costs may freeze salaries, reduce their workforce, or increase product prices, leaving workers worse off.
Government's proposal seen as 'Greek gift'
The National Pension Commission announced the proposed increase as a means to enhance retirement benefits, citing insufficient savings for old age. However, employers described the proposal as a "Greek gift"—something that appears beneficial but causes hidden harm. They object to the timing, noting that the announcement came while consultations were still ongoing, rendering the engagement a mere formality.
"A strong pension system can only work if businesses are surviving and workers have stable jobs to contribute from in the first place," the spokesperson added. Nigerian businesses are already grappling with high energy costs, rising interest rates, a volatile exchange rate, and weak consumer spending. Adding another compulsory cost, they argue, is the last thing the economy needs.
Call for proper assessment and dialogue
The business groups are urging the Federal Government to conduct thorough economic assessments and broader consultations before implementing any changes. They maintain that while the goal of improving retirement benefits is laudable, the approach must not undermine the very workers it aims to protect.
Without proper research and genuine dialogue, the proposed pension increase risks exacerbating the financial strain on both employers and employees, potentially leading to the opposite of its intended effect.
