The Organised Private Sector of Nigeria (OPSN) has warned that the proposed increase in mandatory pension contributions, along with the introduction of an additional mandatory yearly contribution equivalent to three per cent of the total wage bill, could erode workers’ purchasing power, threaten employment and wage growth, undermine business sustainability, and escalate compliance risks and inflation.
 The warning was contained in a joint statement issued on Thursday by members of the OPSN, comprising 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 25 other sectoral employer associations.
 
They expressed deep displeasure in the announcement by the Director-General of the National Pension Commission (PenCom), warning that while the proposal may be presented as an effort to improve retirement benefits, it could become a “Greek gift” to Nigerian workers under the prevailing economic conditions.
 The OPSN maintains that the strength of any contributory pension system depends fundamentally on the survival of businesses, the availability of decent jobs and the capacity of employers and employees to make consistent contributions.
 
Under the Pension Reform Act 2014, Nigeria’s minimum pension contribution already 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.
  This is broadly comparable with the OECD average effective mandatory pension contribution rate of 18.8 per cent at the average-wage level in 2024.
  
The Director-General of NECA, Mr. Adewale-Smatt Oyerinde, emphasised that the proposed hike is both premature and counterproductive, stressing that announcing the increase while consultations are still ongoing, risks prejudging the outcome of the process and reducing subsequent stakeholder engagements to a mere formality.
  He stressed that previous adjustments to pension contribution rates were preceded by extensive engagement among government, employers, organised labour and other relevant stakeholders.
 
Elaborating on the macroeconomic consequences, the Director-General of MAN, Mr. Segun Ajayi-Kadir, highlighted the direct threat to enterprise viability and worker earnings, noting that it will escalate costs, inflation and risk to job security.
 Ajayi-Kadir stated that businesses are already contending with high energy costs, elevated interest rates, exchange-rate volatility, multiple regulatory obligations, weak consumer demand and rising production expenses.
 
According to him, imposing an additional statutory payroll cost without a comprehensive impact assessment will place further pressure on already struggling enterprises.
 He explained that higher employment costs could compel businesses to slow recruitment, postpone wage reviews, reduce staff strength, increase outsourcing, suspend expansion plans or pass additional costs to consumers through higher prices.
  
“The proposed increase may directly raise the existing employee contribution, but its wider consequences could still be borne by workers through weaker wage growth, reduced employment opportunities, job losses and higher prices of goods and services,” he added.
  Highlighting the contradiction with broader fiscal policies, the Director-General of NACCIMA, Mr. Sola Obadimu, stated that at a time when the Federal Government is implementing reforms to improve competitiveness, imposing another statutory financial obligation on employers could undermine the benefits of those reforms.
 
Obadimu explained that reform cannot be considered successful merely because it promises improved retirement benefits, noting that its impact on employment, investment, wage growth, prices, compliance and business survival must also be carefully considered.
 The Director-General of NASSI, Ifeanyi Oputa, stressed that micro, small and medium-sized enterprises would be disproportionately affected by any increase in mandatory employer pension contributions.
  
He stated that while MSMEs operate with narrow margins and limited access to affordable finance, many are still struggling with rising energy costs, declining purchasing power, multiple levies and increasing operating expenses.
 According to him, an additional statutory burden could threaten their survival and discourage them from employing workers formally..
 
The OPSN, however, urged the Federal Government and PenCom to pivot away from policies that erode purchasing power and instead prioritise macroeconomic stability, enterprise sustainability and job preservation:
 Specifically, the OPSN stressed that government attention should be directed toward reining in inflation, preserving workers’ immediate cash flow and promoting business sustainability to create decent jobs and improve welfare.
 
The OPSN also called for a detailed assessment to determine the likely effects of the proposal on employment costs, wage growth, recruitment, job security, investment, production costs, inflation, business formalisation and MSME sustainability.