‘7.3m out of 11m RSA holders actively contributing pension’

Out of the 11 million Retirement Savings Account (RSA) holders, about 7.3 million are currently contributing pension into their accounts, Daily Trust checks have shown. Nigeria’s Contributory Pension Scheme, established under the Pension Reform Act of 2004 and strengthened in 2014, was a genuine improvement over the Defined Benefit system it largely replaced. Under the […]

Out of the 11 million Retirement Savings Account (RSA) holders, about 7.3 million are currently contributing pension into their accounts, Daily Trust checks have shown.

Nigeria’s Contributory Pension Scheme, established under the Pension Reform Act of 2004 and strengthened in 2014, was a genuine improvement over the Defined Benefit system it largely replaced.

Under the old system, government pensions were paid from annual budgets, a model that collapsed under fiscal pressure, leaving millions of retirees unpaid for months or years. The CPS introduced individual RSAs, mandatory contributions, and professional fund management.

Consequently, by February 2026, data from the National Pension Commission show that the industry had grown to over N29 trillion in assets under management, with more than 11 million registered contributors.

However, checks by our correspondent showed that the uncomfortable reality is the majority of Nigerians are either outside the system entirely, contributing too little to matter, or losing money to administrative failures they are not even aware of.

 

85% informal sector not contributing pension

Further checks showed that Nigeria’s informal sector accounts for an estimated 80 to 85 percent of total employment. They consist of market traders, artisans, commercial drivers, freelancers, domestic workers, farmers, none of them have employers to remit pension contributions on their behalf, and most have never opened an RSA.

This is even as CPS, currently structured, was designed for formal employment.

That means the vast majority of Nigeria’s working population is building no pension at all.

According to the Pension Fund Operators Association of Nigeria, “roughly 11 million registered contributors, only about 7.3 million are active contributors, meaning contributions are being made into their RSAs regularly. 

The gap between registered and active contributors is itself a warning sign. Many people open an RSA when they start a job and never see another contribution if they move to a different employer, become self-employed, or if their employer simply stops remitting,”

 

The data recapture gap

Many workers who are now in the CPS, began their working lives before 2004, under the old Defined Benefit Scheme (DBS). When the transition happened, their accrued pension rights from the years of pre-CPS service were supposed to be captured and reflected in a Government Approved Bond or equivalent, what PenCom calls Accrued Rights.

However, the challenge is that for many of these workers, particularly at the state level, this data capture was never completed properly. In most cases, records are missing, incomplete, or inconsistent. When they retire, they discover that years of service simply do not appear in their pension calculation.

Also, stakeholders have consistently maintained that ones’ pension is a function of his or her salary.

“Your pension is a function of your income. If your income is low, your pension will be low. The contributory model is structurally sound, but it cannot solve income inequality on its own,” PenOp said

 

State govt pensions remain a crisis in waiting

While the federal government and private sector employers have largely transitioned to the CPS, many state governments remain on the old DBS model or a hybrid that functions poorly. Civil servants in several states contribute throughout their careers only to face delayed, incomplete, or unpaid pensions upon retirement.

When state civil servants retire without adequate pension, they become dependents on family, on government social intervention programmes, and on the same state budgets that already failed to fund their pensions properly.

PenCom data showed that only seven states had adopted the CPS as of recent reporting, with varying degrees of compliance even among those. This is a policy emergency that receives insufficient public attention.

 

Personal pension scheme to the rescue

Checks by Daily Trust showed that the CPS allows contributors to make Voluntary Contributions (VCs) now called Personal Pension Plan (PPP) above the mandatory 8 percent employee contribution.

These contributions attract tax relief up to a certain threshold, they are deducted from your taxable income, meaning the government is effectively subsidising your additional savings. PPPs are invested alongside your mandatory contributions and grow over time.

“When contributors retire, they typically have two main options for accessing their pension: purchasing an annuity from a life insurance company (which pays a fixed monthly income for life) or a Programmed Withdrawal through their PFA (which pays monthly based on their balance and life expectancy).

“What many contributors do not realise is that they also have the option to withdraw up to 25 percent of their RSA balance as a lump sum before setting up their monthly pension, if they are below 50 and have been unemployed for four months, or at retirement under certain conditions. Taking a large lump sum upfront permanently reduces the balance available to generate monthly income. If you collect this lump sum upfront, without a plan for how the money withdrawn will generate returns, you have simply shrunk your monthly pension for the rest of your life.

“ Every naira withdrawn upfront is a naira that is no longer compounding for your future. Emeka took a lump sum to renovate his house. He does not regret the renovation. But he wishes someone had shown him the numbers before he signed,” Operators said in a document explaining how PPP works

 

What must change

PenOp believes the following changes are needed to ensure a more CPS system which include “Expand coverage to the informal sector. The PPP launched by PenCom is a step in the right direction, but uptake remains low. We are committed to enhancing awareness and sensitisation around the benefits of PPP and the incentives especially for low-income informal workers which would transform coverage.