The Organised Private Sector of Nigeria (OPSN) has rejected the proposed increase in mandatory pension contributions, warning that the move could threaten jobs, wage growth and the survival of businesses across the country.
The OPSN, comprising the Manufacturers Association of Nigeria (MAN), National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Nigeria Employers’ Consultative Association (NECA), Nigerian Association of Small and Medium Enterprises (NASME), Nigerian Association of Small Scale Industrialists (NASSI) and 25 sectoral employer associations, described the proposal as premature and potentially counterproductive.
The groups were reacting to the recent announcement by the Director-General of the National Pension Commission (PenCom) regarding plans to increase mandatory pension contributions and introduce an additional three per cent annual contribution based on employers’ total wage bills.
In a statement issued on Thursday by MAN, NACCIMA, NECA, NASME and NASSI, the OPSN warned that although the proposal was intended to improve workers’ retirement benefits, it could become a “Greek gift” to employees under the prevailing economic conditions.
The private sector body argued that the sustainability of any contributory pension system depended largely on the survival of businesses, the availability of decent jobs and the ability of employers and employees to make regular contributions.
It noted that under the Pension Reform Act 2014, Nigeria’s minimum pension contribution currently stands at 18 per cent of an employee’s monthly emoluments, comprising 10 per cent from the employer and eight per cent from the employee.
The OPSN said the existing contribution rate was broadly comparable with the Organisation for Economic Co-operation and Development (OECD) average effective mandatory pension contribution rate of 18.8 per cent at the average-wage level in 2024.
It therefore called for Nigeria-specific actuarial evidence to establish that the current contribution rate was insufficient before any increase could be considered.
Speaking in Lagos, the Director-General of NECA, Adewale-Smatt Oyerinde, said the proposed increase was premature, noting that consultations between the government and stakeholders were still ongoing.
“The OPSN supports efforts aimed at strengthening Nigeria’s pension system and improving retirement outcomes for workers. However, announcing that contribution rates will increase while consultations are still ongoing risks prejudging the outcome of the process and reducing subsequent stakeholder engagements to a mere formality,” Oyerinde said.
He stressed that previous adjustments to pension contribution rates had been preceded by extensive consultations involving the government, employers, organised labour and other stakeholders.
Oyerinde said any adjustment must be supported by credible actuarial, economic and employment-impact assessments and should emerge from genuine and transparent social dialogue.
The Director-General of MAN, Segun Ajayi-Kadir, warned that an additional statutory payroll cost could further weaken businesses already struggling with high energy costs, elevated interest rates, exchange rate volatility, multiple regulatory obligations, weak consumer demand and rising production expenses.
He said increased employment costs could force businesses to slow recruitment, postpone wage reviews, reduce staff strength, increase outsourcing, suspend expansion plans or transfer additional costs to consumers through higher prices.
Ajayi-Kadir added that workers could ultimately bear the consequences through weaker wage growth, reduced employment opportunities, job losses and higher prices of goods and services.
Similarly, the Director-General of NACCIMA, Sola Obadimu, cautioned against imposing additional financial obligations on businesses at a time when the private sector was still recovering from prolonged economic pressures.
He argued that government policies should be properly coordinated and assessed based on their cumulative impact on businesses.
The Director-General of NASSI, Ifeanyi Oputa, said micro, small and medium-sized enterprises would be disproportionately affected by any increase in mandatory employer pension contributions.
Oputa noted that many MSMEs were operating on narrow margins and had limited access to affordable finance, while also contending with rising energy costs, declining purchasing power, multiple levies and increasing operating expenses.
He warned that the additional burden could discourage businesses from employing workers formally and deepen non-compliance, potentially pushing more employers and workers into the informal sector.
The OPSN urged the Federal Government and PenCom to prioritise macroeconomic stability, enterprise sustainability and job preservation rather than introducing policies that could further erode workers’ purchasing power and increase the cost of employment.
It called for a comprehensive assessment of the proposal’s likely impact on employment costs, wage growth, recruitment, job security, investment, production costs, inflation, business formalisation and MSME sustainability.
The private sector body said it was not opposed to reforms aimed at improving retirement security but insisted that any increase in pension contributions should follow constructive and transparent dialogue among all relevant stakeholders.
The OPSN maintained that pension reforms must strike a balance between improving future retirement benefits and addressing the present economic realities confronting workers and businesses.
The Federal Government, through PenCom, announced in 2026 that it was reviewing the Pension Reform Act 2014 and considering an increase in the mandatory pension contribution rate beyond the current 18 per cent.
According to PenCom, the proposed changes form part of wider reforms aimed at strengthening the financial security of Nigerian workers in retirement, with consultations ongoing with organised labour, employers, pension operators and the National Assembly before any amendment is presented for legislative approval.
