The Nigerian Pension Landscape: A 2024 Overview
The Nigerian pension landscape in 2024 showcased significant growth and impact, marked by a substantial rise in death benefits payouts, sustained contributions, and increased participation across various schemes. A key highlight of the year was the N82.22 billion disbursed in death benefits to the families of 10,451 deceased contributors, representing a 40.3% increase from the N58.6 billion paid in 2023. This substantial increase signifies the growing financial importance of the pension scheme in providing crucial support to the families of deceased contributors, underscoring its role as a safety net during times of loss. This upward trend in death benefit payments, observed consistently over the years, from N31.09 billion in 2020 to N82.22 billion in 2024, reflects both improved compliance with the Contributory Pension Scheme (CPS) and a growing awareness among contributors about securing their families’ financial future.
Beyond death benefits, the pension industry witnessed substantial activity across other payout categories. The monthly programmed withdrawal scheme, designed to provide retirees with regular income, disbursed N114.5 billion as of Q3 2024. The retiree life annuity system, another avenue for securing consistent income post-retirement, recorded premium payments totaling N689.4 billion. Lump-sum payments, which allow retirees to access a portion of their savings upon retirement, amounted to N83.73 billion, covering 19,481 retirees. Notably, the number of retirees opting for lump-sum payments decreased compared to previous years, indicating a shift towards structured withdrawal plans that align with long-term financial planning, a positive trend reflecting greater financial prudence among retirees.
The growth of the Nigerian pension industry is further underscored by the continuous increase in pension contributions. By Q3 2024, cumulative pension contributions reached N10.97 trillion, with the public sector contributing N5.71 trillion (52.1%) and the private sector contributing N5.25 trillion (47.9%). This near-equal contribution split between the public and private sectors demonstrates the broad-based adoption of the CPS across different segments of the Nigerian workforce. The number of registered Retirement Savings Accounts (RSAs) also continued to climb, reaching 10.54 million by Q3 2024, with 118,339 new registrations during the year. This consistent growth in RSA registrations highlights the increasing adoption of the pension scheme and the sustained efforts towards enhancing pension inclusion across the country.
The Micro Pension Plan (MPP), introduced in 2019 to cater to the informal sector, experienced significant growth, reflecting an increasing awareness of the importance of pension security among informal workers. By Q3 2024, the MPP recorded 164,031 registrations, with savings reaching N967.19 million, a substantial increase from N89.12 million in 2020. This significant growth, despite the economic challenges faced by many in the informal sector, showcases the MPP’s success in reaching a previously underserved segment of the population and providing them with a valuable savings mechanism for their future.
The government also continued to address the pension needs of employees who were part of the old pension scheme before the introduction of the CPS in 2004. Payments under accrued rights, which cover the pension entitlements of these individuals, remained steady, with N61.71 billion disbursed to 14,873 beneficiaries in 2024. This consistent disbursement ensures continued financial support for retirees transitioning from the old scheme to the CPS, demonstrating the government’s commitment to honoring past pension obligations. The RSA transfer system, which allows contributors to switch Pension Fund Administrators (PFAs) once a year, also experienced increased activity, with N1.26 trillion transferred since its inception and 67,146 RSA transfers recorded in 2024. This increased activity suggests greater awareness among contributors about their right to choose a PFA that best suits their needs, fostering competition among PFAs to offer better returns and service delivery.
While the Nigerian pension industry exhibited robust growth and positive trends in 2024, challenges remain. The overall economic conditions and inflationary pressures continue to influence the performance of pension funds. Maintaining the growth trajectory will require sustained efforts to address these challenges and ensure the long-term sustainability of the pension system. Furthermore, continuing to expand coverage, particularly within the informal sector, remains a crucial goal. Strengthening public awareness campaigns about the benefits of pension planning, particularly for the younger generation, is essential for long-term financial security and overall economic stability.
The progress observed in 2024 indicates that the Nigerian pension system is evolving into a more mature and robust system, providing crucial financial security for a growing number of Nigerians. Continued efforts to improve transparency, efficiency, and public awareness will further strengthen the system and ensure its ability to meet the retirement needs of current and future generations. The positive trends observed in death benefits, various withdrawal schemes, contributions, and the growth of the Micro Pension Plan highlight the increasing importance of the pension system in Nigeria’s economic landscape. As the system continues to mature, it is poised to play an even greater role in promoting financial security and economic stability in the years to come.
