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Pension Reform Act review may raise employer, employee contribution rates – PenCom
By Olamide Akintunde
The National Pension Commission (PenCom) has unveiled plans to increase Nigeria’s statutory pension contribution rates as part of the ongoing review of the Pension Reform Act (PRA) 2014, a move aimed at strengthening retirement security for workers.
PenCom Director-General, Omolola Oloworaran, disclosed this during the 2026 Pension Consultative Forum for States, the Federal Capital Territory (FCT) and Licensed Pension Fund Operators (LPFOs), 
Under the existing Contributory Pension Scheme (CPS), employers contribute a minimum of 10 per cent of an employee’s monthly emoluments, while employees contribute 8 per cent, bringing the total mandatory contribution to 18 per cent. PenCom is proposing an upward review of this rate.
Oloworaran said the commission has commenced consultations with organised labour, the National Assembly and other stakeholders to secure broad support before any amendment to the law is finalised.
“We are having active conversations regarding the review of the Pension Reform Act with all necessary parties, including Labour and the National Assembly,” she said.
“It is still at the engagement stage. The rates of contribution will certainly go up, but we must ensure that all key stakeholders buy into it first.”
She explained that the review is intended to enhance retirement savings while strengthening the long-term sustainability of Nigeria’s pension system.
The PenCom chief also revealed that the commission is considering measures to establish dedicated revenue streams for state pension bureaus to improve compliance and encourage wider adoption of the CPS by state governments.
She expressed dissatisfaction with the pace of implementation of the scheme at the sub-national level, noting that only eight of Nigeria’s 36 states currently operate the CPS in full compliance with the law.
“I am not satisfied at all with where we are,” Oloworaran said.
“If you were to rate it, we still have an ‘F9.’ We still have only eight states out of 36 states complying. There has to be more political will. Governors must prioritise their workers and their future when they retire—not just worry about today. All 36 states should be under the Contributory Pension Scheme.”
Responding to concerns raised by states over funding and operational constraints, she said PenCom is exploring sustainable financing options for state pension bureaus.
“We have listened to them, and I think there is a good point in what they are saying. We will explore ways to create income streams for state pension bureaus. It might not be in the exact form they are prescribing, but we will certainly do something,” she said.
Oloworaran also criticised the practice by some state governments of deducting pension contributions from workers’ salaries without remitting the funds into their Retirement Savings Accounts (RSAs).
“In my personal opinion, deducting funds from employees and putting them in a state account is something that should never happen,” she said.
“Any incoming governor who doesn’t understand the original purpose of those funds could divert them elsewhere. That results in pension obligations skyrocketing and leads to a broken system in the future. We will actively engage those states to stop this practice.”
Meanwhile, Nigeria’s pension assets climbed to a record N31.32 trillion in May, according to PenCom’s latest unaudited industry report.
The assets grew by 1.23 per cent from N30.94 trillion recorded in April, representing an increase of approximately N384.98 billion within one month.
On a year-on-year basis, pension assets expanded by 29.5 per cent from N24.18 trillion in May 2025, underscoring the continued growth of the country’s pension industry and the increasing role of retirement savings in the financial system.
The Pension Reform Act 2014, which replaced the 2004 legislation, established the legal framework for Nigeria’s Contributory Pension Scheme and strengthened PenCom’s regulatory oversight of the industry.