In the first half of the year 2024, employers from both public and private sectors contributed approximately NN692 billion to the retirement savings accounts of employees, as reported by the National Pension Commission. This amount was a result of pension contributions that totaled N314.17 billion in the first quarter and increased to N377.83 billion in the second quarter. The public sector contributed a substantial N380.28 billion, outpacing the private sector’s N311.72 billion contributions. However, a year-over-year analysis highlighted a decline, as total contributions in the same period of 2023 reached N746.45 billion, indicating a 7.29 percent drop in the current year. The cumulative pension contributions since the inception of the scheme have grown to N10.63 trillion, reflecting a significant increase from the N9.37 trillion recorded in the previous year.
The employment landscape in Nigeria, as detailed in the National Bureau of Statistics’ Nigeria Labour Force Survey for 2023, revealed a labor force comprising 88.94 million individuals from a working-age population of 116.60 million. Alarmingly, 27 percent of this labor force has no formal education, which poses challenges for job prospects and skills development. Abia State recorded the highest unemployment rate at 18.7 percent, while Nasarawa had the lowest at 0.5 percent. Additionally, only 26.3 percent of the workforce had access to pension or health insurance schemes, underscoring the lack of coverage for many workers. Despite these figures, the implementation of the Contributory Pension Scheme (CPS) remains largely stagnant among states, with 25 states and the Federal Capital Territory enacting laws supporting CPS, while others are still at varying legislative stages.
The Pension Fund Operators Association of Nigeria observed a consistent trend of public sector dominance in pension contributions historically. However, since the second quarter of 2021, the private sector has shown a commendable increase in its contributions, even matching or exceeding those of the public sector in certain instances. This ascent in private sector contributions is indicative of improved regulatory compliance, a more active participation from employers, and a broader understanding of pension responsibilities. The association posited that if additional states were to adopt the CPS, it would lead to heightened compliance, a diversified contributor base, and a fortified pension ecosystem, ultimately enhancing financial security for retirees nationwide.
Younger Nigerians are increasingly participating in the retirement savings scheme, as demonstrated by the latest new registrations. In the second quarter alone, 100,063 new registrations were recorded, with approximately 83.05 percent of the active contributors being under the age of 40. Among these, 12.83 percent fell into the 40-49 age bracket, reflecting a shift towards greater involvement of the younger demographic in retirement planning. This trend is promising for the sustainability of the Contributory Pension Scheme (CPS), as greater numbers of young individuals being enrolled into the system signal a positive outlook for pension funding in the future.
Gender dynamics within the registration statistics also emerged, with 59.71 percent of new registrants being female, while men accounted for 40.29 percent. This pattern of women surpassing men in registration mirrors previous trends observed in the first quarter of the year. The steady increase in young contributors and the significant involvement of women in pension registrations bolster the future viability and potential expansion of the CPS in Nigeria. The encouraging statistics suggest that awareness and accessibility issues surrounding pension schemes are beginning toshift positively, particularly among younger populations and women.
As of the end of August 2024, the pension funds industry in Nigeria had assets valued at N21.13 trillion, marking a 1.66 percent increase from the July total of N20.79 trillion. Additionally, the number of Retirement Savings Account (RSA) registrations has reached over 10.45 million since the inception of the pension scheme. This growth reflects a growing commitment among Nigerians toward securing their financial futures through structured pension savings. The upward trend underscores the necessity of enhancing compliance and expanding participation in the CPS, which would not only solidify the financial foundations for retirees but would also stimulate overall economic growth through increased investments.
