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  • Writer's pictureDamilola Agubata

How the CPS Cushions Job Losses for Nigerian Workers

The Contributory Pension Scheme (CPS) has a lot of benefits for Nigerian workers who are also pension contributors.

This article will focus on one of these benefits – which is offering a pension contributor access to 25 per cent of the balance of his or her Retirement Savings Account (RSA) in the event of temporary loss of job.

What is Temporary Loss of Job?

As documented in the Pension Reform Act 2014 (PRA 2014), temporary loss of a job is when an employee loses a job and is unable to secure another employment after four months.

The PRA 2014

Section 7(2) of the PRA 2014 states that “where an employee voluntarily retires, disengages or is disengaged from employment as provided for under section 16 (2) and (5) of the PRA 2014, the employee may with the approval of the Commission, withdraw an amount of money not exceeding 25% of the total amount credited to Retirement Savings Account, provided that such withdrawals shall only be made after 4 months of such retirement or cessation of employment and the employee does not secure another employment.”

COVID-19 and PRA

The COVID-19 pandemic brought to light this significant offering in the PRA, especially considering how the activities in several organizations got slowed down and many workers were ousted from their jobs.

Owing to the pandemic, Nigeria and the global economy at large suffered gravely. Many employees found themselves without jobs during this period due to employers reducing their level of operations.

But while this situation persisted, the employees under the Contributory Pension Scheme (CPS) had their RSA balances to fall back on.


The National Pension Commission (PenCom) approved the sum of N21.52 billion regarding 38,846 requests from individuals seeking to access 25 per cent of their RSA balances due to temporary loss of employment in 2021.

The payment approvals were granted to Pension Fund Administrators (PFAs) after the Commission ascertained that the RSA holders who lost jobs were under the age of 50 years and were unable to secure another employment four months after the date of their disengagements.

A breakdown of the payment approvals showed that during the first quarter of 2021, the Commission granted approval to PFAs to pay N5.02 billion to 10,619 RSA holders that were disengaged from employment.

During the second quarter of the same year, N4.43 billion was paid to 7,906 RSA holders for the same purpose.

In the third quarter, N5.66 billion was disbursed to 9,517 RSA holders. Furthermore, during the fourth quarter, the Commission granted approval to PFAs to pay N6.41 billion to 10,804 RSA holders.

PRA Clause

The PRA 2014 also clearly states that where an employee has accessed the 25 per cent for temporary loss of job, such employee shall afterwards access the balances in the retirement savings account only at the time of retirement.

Notwithstanding this clause, it is critical for workers and retirees under the CPS to understand that the scheme is formulated to cater for life at old age and therefore the operations of the CPS do not allow RSAs to operate like the normal savings account in the commercial banks where a customer deposits and withdraws funds at any time.


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