Nigeria’s pension assets contribution to the country’s GDP has risen to 8 percent in 2024, from 5.6 percent in 2015.

While this rise reflects a positive trend in the management of the country’s pension funds, Nigeria still lags behind the global average put at 30 percent, highlighting need for increased saving and regulatory compliance.

Industry players believe that a shift towards better savings habits among Nigerians and adherence to regulatory compliance by employers at all levels would enhance contribution of the sector to the country’s economy.

As at the end of January 2025, pension assets has risen to N22.86 trillion, as against N22.51 trillion in December 2024, indicating additional N349.3 billion. Pension registration, indicating enrolment has also risen to 10, 615, 028 at the of January 2025.

Agudah Oguche, chief executive officer, Pension Fund Operators Association of Nigeria (PenOp) said for this ratio to increase, Nigerians must improve their savings culture and compliance with the law.

“Worldwide, pension savings are crucial to economic development. This is because pension saving are largely considered the largest pool of investable capital.

He said that in the United States of America, pension assets represent approximately 159 percent of GDP while the average global ratio is about 30 percent. “Pension assets being patient capital means these funds can be tapped into for long-term developmental goals.”

Oguche noted that although, Nigeria’s pension assets to GDP ratio has increased from 5.6 percent in 2015 to 8 percent in 2024, the country is still far behind the global average.

“Addressing these factors will be crucial in building a more robust pension system that ensures long-term financial security for the citizens.”

The National Pension Commission (PenCom) recently called on states and local governments to implement the Contributory Pension Scheme (CPS) for a pension-secure Nigeria.

The Pension Reform Act (PRA) 2014, in Section 2(1), stipulates that the CPS applies to all public sector employees across the Federation, including the Federal Capital Territory, states, and local governments, as well as the private sector.

However, in line with the 1999 Constitution of the Federal Republic of Nigeria (as amended), state governments have the constitutional right to legislate on pension matters within their jurisdictions. As such, state governments are required to domesticate the CPS by enacting appropriate pension laws within their states.

In August 2006, the National Council of States adopted the CPS for all states and local governments. To support this adoption, PenCom developed a Model State Pension Law, enabling state governments to modify it according to their unique needs. PenCom reviews draft state pension laws and guides states throughout the implementation process.

So far, many states are yet to implement the CPS. For a state to implement the CPS in full, the state is required to enact a law on CPS, establish a Pension Bureau, register its employees with Pension Fund Administrators (PFAs) and commence remittance of pension contributions. The state is also required to carry out Actuarial Valuation, commence funding of Accrued Pension Rights, procure Group Life Insurance for its employees, and open and fund a Retirement Benefits Bond Redemption Fund Account with the Central Bank of Nigeria (CBN) or PFA.

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The CPS offers a long-term solution to the pension liabilities that many states currently face. By failing to address pension arrears, states are inadvertently creating a financial burden for future generations, as these liabilities will continue to grow. Adopting the CPS now will help states avoid these escalating costs and provide a more secure financial future for both retirees and taxpayers.

Jude Odoh, an insurance broker said savings and need for financial literacy cannot be over emphasised, particularly in the informal sector.

Odoh also stated that greater awareness and understanding of financial products, including pensions, encourage individuals to prioritise savings.

On enhancing accessibility, he said talked on the need for technology “Digital platforms and mobile applications have made it easier for individuals to save and invest, and so increasing accessibility can lead to a broader adoption of pensions, particularly in the in the informal sector, he said.

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