Seven Nigerian states yet to enact contributory pension laws

Seven states in Nigeria were yet to enact contributory pension laws as of December 2020, the National Pension Commission (PenCom) has said in a report.

The Contributory Pension Scheme (CPS) was established under the Pension Reform Act of 2004, which was repealed and replaced with the Pension Reform Act in 2014.

It mandates a minimum contribution of 10 and eight per cent of employees” monthly emolument by the employer and employee respectively.

This is paid into the employee’s Retirement Savings Account (RSA).

According to a report on the implementation of the scheme published by PENCOM, as of December ending, 25 states had the contributory pension laws. Five operated other pension schemes.

The remaining states are Kwara, Plateau, Bauchi, Borno, Katsina, Akwa Ibom, and Cross River.

“As at Q4 2020, twenty-five (25) States of the Federation had enacted pension laws on the CPS while seven (7) States were at the bill stage,” the report said.

“Out of the five (5) States operating other pension schemes, four (4) States have adopted the Contributory Defined Benefits Scheme (CDBS), while one, (Yobe State) operates the Defined Benefits Scheme (DBS).”

“Only Lagos and Abuja fully comply”

To fully implement the scheme, a state has to at least establish a pension bureau, register its employees with PFAs, remit 10 per cent employer and eight per cent employees’ pension contributions for employees, conduct actuarial valuation, open retirement benefits bond redemption fund account, fund accrued pension rights and group life insurance policy.

The report said of the 25 that have enacted the relevant laws, some are yet to fully follow through with the scheme.

Oyo, Bayelsa, Imo, Enugu, Ebonyi, Abia, Taraba, Gombe, and Adamawa States just enacted the law and left the implementation untouched, the report said.

Although Kogi State established a pension bureau, it is yet to fulfill others requirements.

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Sokoto registered some of its employees with PFAs and stopped there.

Only Lagos and the Federal Capital Territory seemed to have fully complied.

A breakdown of the report showed that about 77 per cent of those that joined the CPS were below 40 years of age.

“This points to the increasing sustainability of the CPS, as the younger generation are actively being enlisted into the scheme. Sixty three per cent of those that registered are male, while 37 per cent are female,” the report said.


According to the report, the total pension contributions remitted to the retirement savings accounts in the fourth quarter of 2020 stood at N167.74 billion.

Out of this total, the public sector accounted for N86.93 billion (51.81percent) while the private sector contributed N80.81 billion (48.18 per cent).

“The cumulative pension contributions received from both the public and private sectors from inception to the end of the fourth quarter of 2020, therefore, amounted to N6.70 trillion, up from the N6.54 trillion as at the end of the third quarter 2020, representing a growth of 2.45 percent,” the report said.

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