Nigeria. Understanding the Contributory Pension Scheme
The Contributory Pension Scheme, CPS, which commenced in July 2004, seeks to, amongst others, ensure that every worker receives his retirement benets asand when due.
Hence, pension contributions is the total contributions of both employer and employee from July, 2004 to the month of retirement based on applicable grade level/step, salary structure and income earned on the contributions.
Features of the CPS Contributory in nature: The CPS is contributory in nature. This means that the employer will contribute 10 percent, while the employee will contribute 8 percent to make up the 18 percent minimum monthly contribution. An employer may however elect to contribute the entire 18 percent on behalf of its employees. In addition, voluntary contributions are allowed.
Mandatory in nature: The CPS is mandatory for employees of the Federal Government, the Federal
Capital Territory (FCT) and private sector organizations with three or more employees.
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