The Nigerian pension landscape witnessed significant growth and activity in 2024, marked by a substantial increase in death benefit payouts, sustained contributions, and expanding coverage across various sectors. A notable highlight was the N82.22 billion disbursed in death benefits to the families of 10,451 deceased contributors, a significant 40.3% surge compared to the N58.6 billion paid out in 2023. This substantial increase underscores the growing importance of the pension scheme as a vital safety net for families facing the loss of a breadwinner. The upward trend in death benefit payments since 2020 reflects both increased compliance with the Contributory Pension Scheme (CPS) and heightened awareness among contributors about securing their families’ financial future. This growth signifies the scheme’s strengthening role in providing crucial financial support during challenging times.
Beyond death benefits, the pension industry demonstrated robust activity across multiple disbursement channels. The monthly programmed withdrawal scheme, designed to provide retirees with regular income, saw a cumulative disbursement of N114.5 billion by the third quarter of 2024. Concurrently, the retiree life annuity system, which guarantees a consistent income stream throughout retirement, recorded N689.4 billion in premium payments. Lump-sum withdrawals, allowing retirees to access a portion of their savings upon retirement, amounted to N83.73 billion, covering 19,481 retirees. A notable trend is the declining number of retirees opting for lump-sum payments, suggesting a growing preference for structured withdrawal plans that align with long-term financial security and planning.
The overall growth of the pension industry is evidenced by the substantial cumulative pension contributions, reaching N10.97 trillion by the third quarter of 2024. The public sector contributed N5.71 trillion (52.1%), while the private sector contributed N5.25 trillion (47.9%), demonstrating a relatively balanced contribution pattern. The continuous expansion of pension coverage is further reflected in the 10.54 million registered Retirement Savings Accounts (RSAs) by Q3 2024, with 118,339 new registrations during the year. This consistent growth indicates the increasing adoption of the pension scheme and ongoing efforts to enhance pension inclusion across the workforce.
The Micro Pension Plan, introduced in 2019 to cater to the informal sector, has also gained significant traction. By the third quarter of 2024, registrations reached 164,031, with total savings amounting to N967.19 million, a substantial increase from the N89.12 million recorded in 2020. This growth highlights the growing recognition of the importance of pension security among informal sector workers, even amidst economic challenges. The increasing participation in the Micro Pension Plan signifies progress in extending pension coverage to a broader segment of the population, promoting financial security and inclusion.
Addressing the needs of employees transitioning from the old pension scheme, payments under accrued rights remained steady. A total of N61.71 billion was disbursed to 14,873 beneficiaries in 2024, ensuring continued financial support for retirees migrating to the CPS. Furthermore, the RSA transfer system, which empowers contributors to switch Pension Fund Administrators (PFAs) annually, witnessed increased activity. By the third quarter of 2024, N1.26 trillion had been transferred since the system’s inception, with 67,146 RSA transfers recorded in 2024. This heightened activity suggests greater awareness among contributors about their options and increased competition among PFAs to attract and retain clients by offering better returns and improved service delivery.
While the pension industry demonstrates robust growth in assets and contributions, it operates within a dynamic economic environment. Inflationary pressures and other economic conditions continue to influence the industry, posing challenges to maintaining the real value of pension savings. Navigating these economic realities requires continuous monitoring and adjustments to ensure the long-term sustainability and effectiveness of the pension system in providing adequate retirement income for contributors. Despite these challenges, the positive growth trends across various indicators – including death benefits, overall contributions, RSA registrations, and Micro Pension Plan participation – underscore the resilience and growing importance of the Nigerian pension system in providing financial security for individuals and families.
