FG's plan to increase pension contributions could freeze salaries and cost jobs, Nigerian employers warn

• Business groups say increasing pension contributions would place an additional financial burden on employers.

• They warn companies may respond by freezing salaries, reducing jobs or increasing prices, leaving workers worse off.

• The groups are urging the Federal Government to carry out proper economic assessments and wider consultations before implementing any changes.

Nigerian business owners and employers are pushing back against a Federal Government proposal to increase the amount of money companies and workers must set aside every month for retirement.

The Organised Private Sector of Nigeria, which represents major business groups including manufacturers, traders, and small business owners across the country, has described the proposed increase as poorly timed and potentially harmful to the very workers it is meant to help.

Right now, every Nigerian worker in the formal sector has 18 percent of their monthly salary going into a pension fund, 10 percent from the employer and 8 percent from the worker. The government wants to add more on top of that. The employers say that is too much, too soon.

"Imposing an additional statutory payroll cost without a comprehensive impact assessment will place further pressure on already struggling enterprises," one of the group's spokespersons said.

The business groups are not just fighting for themselves. They are warning that if companies are forced to pay more into pension funds, the cost will find its way back to workers one way or another.

In plain terms: businesses that cannot afford higher costs may freeze salaries, cut jobs, reduce staff, or raise the prices of their products. The worker ends up worse off even though the policy was designed to give them a better retirement.

The employers described the proposal as a "Greek gift", that is, something that looks helpful on the surface but causes harm underneath.

The National Pension Commission announced the proposed increase as a way to improve retirement benefits for Nigerian workers, arguing that people are not saving enough for old age.

The employers do not disagree with that goal. What they object to is the timing and the process, saying the announcement was made while consultations were still ongoing, which they believe reduces the entire engagement to a formality.

They are calling for proper research, economic assessments, and genuine dialogue before any changes are made.

Nigerian businesses are already dealing with high energy costs, rising interest rates, a volatile exchange rate, and weak consumer spending. Adding another compulsory cost, the employers argue, is the last thing the economy needs right now.

They maintain that a strong pension system can only work if businesses are surviving and workers have stable jobs to contribute from in the first place.

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