Nigeria’s pension industry is set for another major transformation as the National Pension Commission (PenCom) has announced plans to increase mandatory pension contribution rates under the ongoing review of the Pension Reform Act (PRA) 2014.
The proposal, if approved by the National Assembly after consultations with organised labour, employers and other stakeholders, would mark one of the most significant reforms to Nigeria’s Contributory Pension Scheme (CPS) since the Pension Reform Act was enacted over a decade ago.
PenCom Director-General, Ms. Omolola Oloworaran, disclosed the development while addressing participants at the 2026 Pension Consultative Forum for States, the Federal Capital Territory (FCT) and Licensed Pension Fund Operators (LPFOs) held in Lagos.
Currently, employers contribute a minimum of 10 per cent of an employee’s monthly emoluments, while employees contribute 8 per cent, making a combined statutory contribution of 18 per cent. PenCom believes the existing rate may no longer be adequate to guarantee comfortable retirement benefits amid rising inflation and increasing life expectancy.
Why PenCom Wants Higher Contributions
According to Oloworaran, discussions are already underway with organised labour, lawmakers and other stakeholders on proposed amendments designed to improve retirement security for millions of Nigerian workers.
She explained that while the Commission has resolved that contribution rates should be increased, broad consultations are necessary to ensure consensus before the proposal is formally presented.
“We are engaging Labour, the National Assembly and all relevant stakeholders on the review of the Pension Reform Act. The contribution rates will certainly increase, but we must carry everyone along.”
Industry observers say increasing pension contributions would significantly boost workers’ retirement savings while providing additional long-term capital for infrastructure development and economic growth.
Only Eight States Fully Complying with Pension Law
The PenCom boss expressed dissatisfaction with the slow implementation of the Contributory Pension Scheme across Nigeria’s 36 states.
According to her, only eight states are fully operating the CPS in accordance with the law.
She described the level of compliance as unacceptable, stressing that governors must prioritise workers’ welfare beyond their years in office.
“If I were to score the level of compliance, it would still be an F9. Governors must think beyond today and ensure workers enjoy financial security after retirement.”
She urged all state governments to migrate fully to the CPS to eliminate the recurring pension crises associated with the old Defined Benefits Scheme.
PenCom Targets Sustainable Funding for State Pension Bureaus
To encourage wider adoption of the CPS, PenCom also revealed plans to establish sustainable income streams for state pension bureaus.
Several states have argued that inadequate funding and administrative challenges have slowed implementation of the pension scheme.
Oloworaran acknowledged these concerns and assured stakeholders that the Commission is considering practical funding models that would strengthen state pension institutions without compromising accountability.
Commission Warns Against Diversion of Pension Deductions
PenCom also condemned the practice by some state governments of deducting pension contributions from workers’ salaries without remitting them into individual Retirement Savings Accounts (RSAs).
The Commission warned that such practices expose pension assets to misuse and could create huge unfunded liabilities for future administrations.
According to Oloworaran, pension deductions belong to workers and should never remain in government accounts where they could be diverted for unrelated purposes.
She pledged that PenCom would intensify engagement with affected states to end the practice.
Nigeria’s Pension Industry Continues Strong Growth
Despite implementation challenges at state level, Nigeria’s pension industry continues to record remarkable growth.
PenCom’s latest unaudited industry report shows that total pension assets climbed to ₦31.32 trillion in May 2026, representing an increase of approximately ₦384.98 billion from ₦30.94 trillion recorded in April.
On a year-on-year basis, pension assets expanded by nearly 29.5 per cent, demonstrating increasing confidence in the Contributory Pension Scheme and the resilience of Nigeria’s pension industry.
Experts React
Dr. Muda Yusuf, Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE) said increasing pension contributions could significantly improve retirement outcomes but cautioned that implementation should be gradual to avoid placing additional financial pressure on workers and employers.
According to him, government must balance workers’ welfare with prevailing economic realities, particularly inflation and rising living costs.
Prof. Uche Uwaleke, Professor of Capital Market, Nasarawa State Universit described the proposed amendment as a positive step toward strengthening Nigeria’s pension system.
He noted that larger pension contributions would expand the industry’s asset base, increase long-term investment funds and support infrastructure financing, while providing retirees with improved financial security.
He, however, stressed that compliance and transparency must improve to ensure contributors enjoy the full benefits of the scheme.
Dr. Boniface Chizea, Financial Economis said raising contribution rates alone would not solve Nigeria’s pension challenges unless all employers—particularly state governments—strictly comply with remittance obligations.
He urged PenCom to strengthen enforcement mechanisms and impose sanctions on employers that fail to remit workers’ pension contributions promptly.
What It Means for Nigerians
If approved, the proposed increase in statutory pension contributions would:
Increase retirement savings for Nigerian workers.
Improve pension benefits after retirement.
Expand Nigeria’s long-term investment capital for infrastructure and economic development.
Strengthen financial stability within the pension industry.
Reduce future pension liabilities and old-age poverty.
Improve confidence in the Contributory Pension Scheme.
What Happens Next?
PenCom will continue consultations with organised labour, employers, state governments and the National Assembly before forwarding amendments to the Pension Reform Act.
Once enacted, the revised law is expected to introduce higher contribution rates alongside broader reforms aimed at strengthening governance, expanding state participation and protecting pension contributors across Nigeria. PenCom, Pension Reform Act 2014, Omolola Oloworaran, Contributory Pension Scheme, Nigeria pension, Retirement Savings Account, pension contributions, pension assets, pension reform, National Assembly, organised labour.
PenCom has unveiled plans to increase statutory pension contribution rates through amendments to the Pension Reform Act 2014, as stakeholders push for stronger retirement savings, wider state adoption of the Contributory Pension Scheme, and better protection of workers’ pension funds.
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