The Imperative of Contributory Pension Scheme Adoption by Nigerian States: A Call for Comprehensive Welfare Reform
The National Pension Commission (PenCom) has intensified its advocacy for the widespread adoption of the Contributory Pension Scheme (CPS) by all Nigerian states. This initiative is driven by the compelling need to ensure the long-term financial security and welfare of retirees across the nation. Currently, only a minority of states have fully embraced the CPS, leaving a significant portion of the workforce vulnerable to the uncertainties of traditional pension systems, which are often plagued by inconsistencies, delays, and inadequate funding. The CPS, introduced through the groundbreaking Pension Reform Act of 2004, represents a paradigm shift in pension administration, emphasizing a sustainable and transparent approach to retirement planning. Under this scheme, both employees and employers make regular contributions to individual retirement savings accounts, fostering a sense of shared responsibility and ensuring a reliable source of income for retirees.
The current landscape of CPS implementation reveals a stark disparity among Nigerian states. As of December 2024, only eleven states, along with the Federal Capital Territory, have fully operationalized the CPS. These pioneering states include Lagos, Kaduna, Ekiti, Edo, Ondo, Delta, Benue, Anambra, Jigawa, and a few others. Their proactive stance has set a positive precedent, demonstrating the tangible benefits of a structured and well-managed pension system. These benefits extend beyond mere financial security, encompassing improved welfare for retirees and a more robust social safety net. PenCom has publicly commended these states for their leadership in embracing pension reform and urged other states to follow suit.
Conversely, a significant number of states remain lagging in CPS adoption. Some have enacted the necessary legislation but have yet to implement the scheme effectively, while others have not even initiated the legislative process. This inaction jeopardizes the financial future of countless workers and underscores the urgent need for comprehensive pension reform across all states. PenCom has specifically called upon Akwa Ibom, Borno, Kwara, Plateau, Cross River, and Yobe states to prioritize the enactment and implementation of CPS legislation. Furthermore, states like Abia, Adamawa, Bauchi, Bayelsa, Ebonyi, Enugu, Gombe, Imo, Kano, Katsina, Kebbi, Kogi, Nasarawa, Niger, Ogun, Oyo, Rivers, Sokoto, Taraba, and Zamfara, which have enacted the law but are yet to fully implement it, have been urged to accelerate the process and join the ranks of the forward-thinking states that have embraced the CPS.
The importance of widespread CPS adoption is further underscored by the recent positive growth trajectory of the Nigerian pension industry. The pension portfolio witnessed substantial growth, reaching N22.51 trillion by December 2024, a significant increase from N18.36 trillion in December 2023. This growth reflects the increasing confidence in the CPS and its ability to deliver sustainable retirement benefits. The growing number of registered Retirement Savings Accounts (RSAs), exceeding 10.5 million, further reinforces the positive momentum and the increasing acceptance of the CPS as the preferred pension system. This upward trend highlights the potential for significant economic benefits that can accrue to states that embrace the CPS, including increased investment and enhanced financial security for their citizens.
Recent developments indicate a growing awareness and acceptance of the CPS among state governments. For instance, the governor of Yobe State, Mai Mala Buni, has expressed his administration’s readiness to implement the scheme. Recognizing the long-term benefits of the CPS, Governor Buni has emphasized its potential to address the persistent challenges of pension arrears and past service liabilities. He has also underscored the importance of comprehensive sensitization programs to educate stakeholders about the intricacies and advantages of the CPS. Such initiatives are crucial for fostering public understanding and buy-in, paving the way for smooth and effective implementation.
In conclusion, the adoption of the Contributory Pension Scheme is not merely a policy option but a critical necessity for ensuring the welfare and financial security of retirees across Nigeria. The progress made by some states serves as a testament to the viability and effectiveness of the CPS. However, the significant number of states that have yet to fully implement the scheme highlights the need for continued advocacy and concerted efforts to achieve nationwide coverage. PenCom’s sustained engagement with state governments, coupled with the growing awareness among policymakers and stakeholders, offers a promising outlook for the future of pension administration in Nigeria. The full realization of a pension-secure Nigeria requires the collective commitment of all states to embrace the CPS and ensure a dignified and financially secure retirement for all its citizens.
