Experts warn against lump-sum pension payment to retirees

• Cite rising threat of old age poverty, depleted savings
• Ogun pensioners demand urgent implementation of CAP
• We won’t take your demands for granted, says state govt

Financial experts have cautioned against mounting calls for retirees to access their pension savings in full, warning that such a move could undermine the long-term sustainability of Nigeria’s Contributory Pension Scheme (CPS) and expose millions of retirees to poverty in old age.

They said that while full withdrawals might offer short-term financial relief amid current economic hardship, the long-term consequences could be severe, eroding retirement security, weakening the pension fund system, and reversing two decades of progress in building a savings culture among Nigerian workers.

The stakeholders said that pensions were not designed as quick-fix savings accounts but as structured financial lifelines to guarantee stability throughout old age.

They stressed that the scheme, introduced in 2004 to replace the failed defined Benefit System, was built to shield retirees from risks, such as longevity, inflation, and poor investment decisions.

“Allowing unrestricted lump-sum withdrawals may provide instant gratification, but it undermines the very purpose of pensions, which is lifetime security,” one pension analyst told The Guardian.

The experts noted that three major dangers retirees may face when cashing out their pensions at once include the possibility of outliving their savings, the unpredictability of market volatility, and the likelihood of failed investments.

Many pensioners, they noted, had lost their life savings by channelling the funds into unprofitable businesses or speculative ventures.

Meanwhile, the Nigeria Union of Pensioners (NUP), Ogun State branch, yesterday, called on Governor Dapo Abiodun to urgently implement the Consequential Adjustments in Pensions (CAP) to alleviate the suffering and hunger experienced by retirees due to the removal of the subsidy.

The NUP equally expressed concern over the current administration’s refusal to meet their demands for the provision of free or affordable healthcare services, the establishment of counselling services, and home care assistance to address challenges to physical and emotional welfare.

Chairman of the NUP, Waidi Oloyede, who spoke during the 2025 Pensioners’ Day Celebration, held at the NUP Secretariat, Leme, Abeokuta, said that the Abiodun-led administration should consider the plights of retirees by implementing the CAP and meeting other necessary demands from the union.

He wondered why the state government, over time, have increased the wages of its workers but never considered increasing pensions of the retirees despite the skyrocketing inflation and high cost of food items, drugs and living conditions, thereby leaving the pensioners to endure current economic hardships in old age.

However, Permanent Secretary of the Bureau of State Pension, Arinola Adetayo, has assured the retirees that efforts are ongoing to ensure sustainable pension reforms that will make their lives easier.