PenCom proposes higher employer pension contributions in planned reform

The National Pension Commission (PenCom) has disclosed plans to increase the statutory pension contribution rate for employers as part of the ongoing review of the Pension Reform Act (PRA) 2014, a move aimed at strengthening retirement security for Nigerian workers.

Director-General of PenCom, Omolola Oloworaran, announced the proposal on Tuesday at the 2026 Pension Consultative Forum for states, the Federal Capital Territory (FCT) and Licensed Pension Fund Operators (LPFOs) in Lagos.

Under the existing pension framework, employers are required to contribute a minimum of 10 per cent of an employee’s monthly emoluments, while employees contribute eight per cent, bringing the total mandatory contribution to 18 per cent.

Oloworaran said the commission is engaging organised labour, the National Assembly and other key stakeholders on proposed amendments to the pension law, noting that discussions are still at the consultation stage.

According to her, increasing employers’ contributions is one of the key reforms being considered to improve retirement benefits, but any decision would be based on broad stakeholder consensus.

“We are having active conversations regarding the review of the Pension Reform Act with all necessary parties, including labour and the National Assembly,” she said.

“It is still at the engagement stage. The rates of contribution will certainly go up, but we must ensure that all key stakeholders buy into it first.”

The PenCom chief also expressed concern over the slow adoption of the Contributory Pension Scheme (CPS) by state governments, revealing that only eight of the country’s 36 states are fully implementing the scheme.

She described the level of compliance as unsatisfactory, saying stronger political commitment was needed to safeguard workers’ retirement benefits.

“I am not satisfied at all with where we are. If you were to rate it, we still have an F9. We still have only eight states out of 36 states complying,” she said.

“There has to be more political will. Governors must prioritise their workers and their future when they retire, not just worry about today. All 36 states should be under the Contributory Pension Scheme.”

Responding to concerns raised by some states over funding challenges, Oloworaran said PenCom is considering measures to create sustainable revenue streams for state pension bureaus, although no specific framework has been adopted.

She also criticised the practice by some state governments of deducting pension contributions from workers’ salaries without remitting the funds into their Retirement Savings Accounts (RSAs), warning that such actions undermine the integrity of the pension system.

According to her, retaining workers’ pension deductions in government-controlled accounts exposes the funds to possible misuse by future administrations and could create significant pension liabilities.

“In my personal opinion, deducting funds from employees and putting them in a state account is something that should never happen,” she said.

“Any incoming governor who doesn’t understand the original purpose of those funds could divert them elsewhere. That results in pension obligations skyrocketing and leads to a broken system in the future.”

She added that the commission would intensify engagement with affected states to ensure full compliance with pension regulations.

The Pension Reform Act 2014 introduced the Contributory Pension Scheme to replace the old defined benefits system and empowers PenCom to regulate and supervise Nigeria’s pension industry.