What is Happening to Your Pension Contribution? Inflation and Corruption are Robbing Your Future

When I retired from paid employment at the age of 34 in January 2017, my total pension contributions from various employers amounted to approximately ?27 million. At that time, this sum was sufficient to purchase a three-bedroom apartment in Alagomeji, Yaba, Lagos. However, I could not access the funds because the law stipulates that I must have reached the age of 50 before withdrawing the money. Today, despite my pension fund growing to around ?53 million through interest, the cost of a similar property in Alagomeji has skyrocketed to ?85 million. And it makes sense: $1 was ?366 in 2017 and over ?1,600 today. Do the math. This stark increase highlights how inflation and foreign exchange rate hikes have outpaced the growth of pension savings, rendering them insufficient for achieving long-term financial security. The Nigerian economy’s instability, characterized by fluctuating rates and other adverse economic indicators, has significantly devalued pension savings, leaving everyone vulnerable.

Adding to the financial strain is the widespread corruption within pension fund management. The Tinubu government was planning to borrow N20 trillion from the pension fund for infrastructure development. Reports of embezzlement, misallocation of funds, and lack of transparency have eroded trust in the system. The mismanagement of pension funds undermines the very purpose they are meant to serve, turning a vital safety net into a source of frustration and insecurity for countless Nigerians.

In response to these dire circumstances, the National Assembly of Nigeria (NASS) should consider revising the Pension Act to allow for voluntary exits, particularly enabling contributors to invest their savings in real estate or other economically beneficial ventures. This proposed amendment will give individuals greater control over their pension funds, allowing them to seek higher returns and better protect their savings and future against inflation. By enabling more flexible investment options, the revised pension framework could help mitigate the adverse effects of inflation and reduce the impact of corruption, ultimately ensuring that pension savings fulfill their intended role in securing a dignified retirement for Nigerians.