PenCom DG Ms. Omolara Oloworaran and His Excellency the Governor of Ondo State Dr. Lucky Aiyedatiwa, CON

Governor Lucky Aiyedatiwa of Ondo State has revealed plans to explore innovative ways to leverage pension funds for driving infrastructural development within the state. This announcement came on Tuesday, 15 April 2025, during a meeting with a delegation from the National Pension Commission (PenCom), led by Director-General Ms. Omolola Oloworaran, in Akure.

The PenCom delegation visited to discuss crucial pension reforms aimed at enhancing retirees’ welfare and ensuring full compliance with the Contributory Pension Scheme (CPS) across Ondo State. During the visit, Governor Aiyedatiwa emphasized the vital role pension funds play in the economic development of the state. He commended PenCom for its proactive stance and reassured the delegation of his administration’s unwavering commitment to the full implementation of the CPS.

One of the key highlights of the visit was the proposal by Ms. Oloworaran for important amendments to the Ondo State Pension Law. Among the proposed changes was the introduction of a Minimum Pension Guarantee (MPG) to support indigent contributors, as well as an Irrevocable Standing Payment Order (ISPO) to ensure consistent and uninterrupted remittances by future administrations. These reforms are designed to safeguard the pension system and protect the rights of pensioners.

Additionally, the PenCom DG advocated for the introduction of a Pension Compliance Certificate (PCC), which would be a mandatory requirement for business licensing, registration renewals, and contract awards within the state. This measure, she explained, would serve to enhance accountability and ensure that employers meet their pension remittance obligations.

Addressing concerns from PenCom’s recent inspection of the Ondo State Pension Commission (OSPEC), which resulted in a compliance score of 72.44%, Ms. Oloworaran urged the state to promptly resolve identified issues to improve its compliance rating. Governor Aiyedatiwa, acknowledging the concerns, expressed his commitment to addressing most of the issues raised before the next inspection and working towards achieving a 95% pension compliance score.

Reflecting on the broader economic implications, Governor Aiyedatiwa also outlined the state’s plans to tap into pension funds for infrastructural development. This vision to channel pension assets into long-term projects such as roads, housing, and public services aligns with the state’s drive for sustainable economic growth and development.

Through these comprehensive measures and reforms, Ondo State is positioning itself not only to improve pension system compliance but also to unlock new avenues for economic growth by harnessing pension funds as a tool for infrastructure development. The Governor’s proactive engagement with PenCom signals a forward-looking strategy that balances fiscal responsibility with long-term development goals.

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Addressing Pension Arrears and Financial Liabilities

Many states are currently grappling with mounting pension arrears, creating long-term financial liabilities that threaten economic stability. The CPS presents a structured and viable solution to these challenges by:

Ensuring that retirees receive their pensions promptly.

Eliminating the accumulation of pension arrears.

Encouraging financial discipline in the assessment and settlement of pension obligations.

Strengthening state economies by preventing pension-related financial crises.

Unlike the DBS, which relies on unpredictable state budgets, the CPS ensures that pension funds are available at the point of retirement, providing security and stability for retirees.

PenCom’s Call to Action for State Governments

PenCom has called on all state and local governments to implement the CPS in line with the Pension Reform Act (PRA) 2014, which mandates its adoption across both public and private sectors. However, due to constitutional provisions, states must enact their own pension laws to domesticate the scheme.

To support this transition, PenCom has developed a Model State Pension Law, offering a clear framework for states to customize and implement CPS effectively. The Commission also provides guidance by reviewing draft state pension laws and assisting in their implementation.

Why the Transition is Essential

With several states already facing significant pension crises, PenCom warns that failure to transition to the CPS will continue to strain public finances and leave retirees vulnerable. The CPS provides a structured and forward-thinking approach to pension management, ensuring:

Prompt and uninterrupted payment of benefits.

Elimination of pension arrears and delayed disbursements.

Enhanced financial accountability and long-term sustainability.

PenCom urges all state governments to prioritize the transition to the CPS to safeguard the financial future of public sector employees and prevent economic distress caused by unsustainable pension liabilities.

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Strengthening Regulatory Oversight

As the primary regulatory authority overseeing pension administration in Nigeria, PenCom has developed robust policies and frameworks to facilitate the smooth transition from the old Defined Benefits Scheme (DBS) to the CPS. The Commission actively monitors compliance levels and provides technical support to state governments to help them align with the Pension Reform Act (PRA) 2014.

PenCom’s oversight functions include:

• Ensuring adherence to CPS guidelines by both public and private sector employers.
• Conducting periodic audits and compliance checks to track the remittance of pension contributions.
• Reviewing and approving state pension laws to ensure they meet national standards.
• Providing advisory support to states that are in the process of adopting the CPS.

Encouraging Full CPS Implementation Across States

Despite the legal mandate for the CPS, many states have yet to fully comply. PenCom continues to engage non-compliant states by:

• Conducting stakeholder engagements with state governments to highlight the benefits of full CPS implementation.
• Developing Model State Pension Laws to guide states in domesticating pension regulations.
• Providing implementation roadmaps to states transitioning from the DBS to the CPS.

Recognizing CPS-Compliant States

As part of its strategy to encourage compliance, PenCom regularly acknowledges states that have successfully implemented the CPS. Fully compliant states, such as Lagos, Osun, Kaduna, Ekiti, Edo, Ondo, Delta, Benue, Anambra, Jigawa, and the Federal Capital Territory (FCT), serve as benchmarks for other states.

These states have demonstrated best practices in pension administration by:

• Ensuring timely remittance of pension contributions.
• Setting up dedicated pension bureaus to oversee CPS implementation.
• Providing group life insurance coverage for employees.
• Funding Accrued Pension Rights to ensure retirees receive their benefits promptly.

Addressing Challenges in CPS Implementation

While progress has been made, challenges remain, particularly in states that have either partially implemented the CPS or have yet to adopt it. Common issues include:

• Delayed remittance of contributions, leading to pension arrears.
• Failure to conduct actuarial valuations, which affects accurate pension liability assessments.
• Lack of adequate funding for Retirement Benefit Bond Redemption Fund Accounts.

To address these challenges, PenCom is intensifying its advocacy efforts and working with key stakeholders, including state governments, pension fund administrators (PFAs), and labor unions, to ensure greater compliance.

The Way Forward: A Fully Pension-Secure Nigeria

PenCom’s vision is clear: a Nigeria where every worker is guaranteed a financially secure retirement. To achieve this, the Commission will continue to:

• Enforce strict regulatory compliance through penalties for non-compliant employers.
• Expand public awareness campaigns on the importance of the CPS.
• Strengthen collaboration with financial institutions to ensure efficient pension fund management.
• Support technological innovations that enhance transparency and efficiency in pension administration.

A pension-secure Nigeria is not just a goal but a necessity. Through sustained efforts, policy enforcement, and stakeholder collaboration, PenCom remains fully committed to ensuring the full nationwide implementation of the CPS, safeguarding the retirement future of millions of Nigerians.

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The National Pension Commission (PenCom) has introduced a transformative policy designed to accelerate the disbursement of retirement benefits to Retirement Savings Account (RSA) holders. This initiative, detailed in the Circular on Approval of Benefits to Holders of Retirement Savings Accounts by Licensed Pension Fund Operators dated March 12, 2025, marks a significant shift in pension administration.

Key Changes Effective June 1, 2025

Under the new framework, Pension Fund Administrators (PFAs) will no longer require prior approval or a “No Objection” clearance from PenCom before processing and disbursing benefits such as Programmed Withdrawal, Retiree Life Annuity, and Temporary Loss of Employment benefits. This change is aimed at reducing delays and improving service efficiency.

However, PFAs are still mandated to seek PenCom’s approval for cases involving depleted RSAs and death benefits, as stipulated in Section 8(2) of the Pension Reform Act 2014.

Faster Processing and Payment Timeline

To ensure seamless benefit disbursement, PFAs must now:

• Process and approve eligible benefit applications within two (2) working days after receiving all required documentation.
• Pension Fund Custodians (PFCs) must complete payments within 24 hours of receiving instructions from PFAs.

Regulatory Oversight and Compliance

According to the report excerpted from the Commission X handling saying PenCom will monitor the entire process through advanced technological platforms and regulatory measures to guarantee strict adherence to the new guidelines. The Commission emphasizes that RSA holders can facilitate faster processing by submitting complete documentation promptly.

Advisory for RSA Holders

• Timely Documentation Submission: Prospective retirees should submit all required documents at least six months before their retirement date to ensure smooth processing.
• Mandatory Supporting Documents: All benefit applications must be accompanied by the prescribed documentation outlined in PenCom’s Regulations and Guidelines.

For further details, RSA holders can visit the Commission’s official website: http://pencom.gov.ng.

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