Paragraph 1: Enhanced Enforcement and Growing Adoption of the Contributory Pension Scheme (CPS)
The National Pension Commission (PenCom) has intensified its efforts to ensure compliance with the Contributory Pension Scheme (CPS), resulting in the recovery of N1.58 billion from defaulting employers. This renewed focus on enforcement has significantly contributed to the increasing adoption of the CPS across Nigerian states, with notable improvements in remittance compliance. PenCom’s Director-General, Omolola Oloworaran, announced these developments during the First Run 2025 Consultative Forum for States and the Federal Capital Territory. The recovery underscores PenCom’s commitment to safeguarding the retirement savings of Nigerian workers and ensuring the long-term sustainability of the pension system. The growing acceptance of the CPS demonstrates a shift towards a more structured and secure retirement savings framework.
Paragraph 2: Progress and Challenges in CPS Implementation Across States
While progress has been made in expanding the reach of the CPS, challenges remain in achieving universal adoption. As of February 2025, 25 states and the Federal Capital Territory (FCT) had enacted the necessary legislation to implement the CPS. However, six states continue to operate hybrid pension schemes, combining elements of the old defined benefit system with the CPS, while another six states have bills at advanced legislative stages. Oloworaran highlighted progress in states like Katsina, Yobe, Bauchi, and Abia, noting that only eight states have fully implemented the CPS. This disparity highlights the need for continued engagement with state governments to ensure complete integration into the CPS framework.
Paragraph 3: PenCom’s Strategies for Expanding CPS Coverage and Supporting State Governments
To address the challenges of varying levels of CPS adoption, PenCom has introduced a flexible implementation model. This approach allows states to gradually transition to the CPS by initially enrolling new employees or those with less than ten years of service. This phased approach aims to minimize disruption and facilitate a smoother transition for states grappling with legacy pension liabilities. Furthermore, PenCom is providing technical assistance to states to help them effectively plan for these liabilities and sustainably transition their workforce into the CPS. This support includes developing strategies to manage existing pension obligations while simultaneously implementing the new contributory system.
Paragraph 4: The Importance of Collaboration and Political Will in Achieving Full CPS Implementation
Oloworaran stressed the importance of collaborative efforts and strong political will in achieving the goal of universal CPS coverage. She emphasized that the consultative forum was not merely a routine gathering but a call to collective action. This call underscores the need for a concerted effort involving all stakeholders, including state governments, labor unions, and PenCom, to strengthen Nigeria’s pension system. Achieving full onboarding of all states and the FCT requires sustained dialogue, technical collaboration, and a commitment from state governments to prioritize pension reform.
Paragraph 5: Kano State’s Progress in Pension Reform and the Role of Consultative Forums
Kano State has demonstrated its commitment to pension reform by adopting a hybrid pension model and making significant strides in clearing outstanding pension entitlements. Alhaji Abdullahi Musa, the Head of Service of Kano State, reported that the state government has cleared N16 billion in inherited liabilities from previous administrations, representing approximately 40 percent of the total outstanding amount. He emphasized the importance of consultative forums like the one held in Kano, describing them as vital platforms for dialogue, peer learning, and policy refinement. These forums provide a valuable opportunity for states to share best practices and collaboratively address the challenges of pension reform.
Paragraph 6: Growth of Pension Assets and Withdrawals by Disengaged Workers
As of February 2025, total pension assets under management in Nigeria had surpassed N23 trillion, marking a significant achievement for PenCom in its mandate to safeguard retirement funds. This growth reflects the increasing contributions to the CPS and the overall strengthening of the pension system. In a separate development, PenCom reported that 23,673 disengaged workers withdrew a total of N33.43 billion from their Retirement Savings Accounts (RSAs) in the third quarter of 2024. This data provides insights into the dynamics of the pension system, reflecting both the accumulation of retirement savings and the utilization of these funds by individuals upon leaving employment.
