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Data from the National Bureau of Statistics (NBS) shows that about 7.5 million Nigerians contribute pensions via the Retirement Savings Account contributors scheme, under the Pension Reform Act of 2004 and as amended in 2014.

Despite this seemingly low small number of contributors, Nigerian pension fund asset under management is estimated at over N6 trillion, according to data from the Pension Fund Commission of Nigeria.

The 7.5 million pension contributors also represent about 14% of Nigerians who are fully employed. NBS data also puts the total number of Nigerians who are fully employed at 52.5 million and those that are underemployed at just over 17 million.

Underemployed Nigerians are those who though are employed, but have jobs that are well below their skill set or academic and professional qualification.

Out of the 14% of Nigerians that are contributing a notable generation of contributors worrying make up a small size of the pool, those born after 1987.

Nigerians born after 1987 are conspicuously contributing far less than expected and this is worrisome.

Nigerians under 30 are missing out

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As the chart above depicts, seven hundred and thirty thousand Nigerians who are less than 30 years old contribute to Nigeria’s pension fund out of the over seven million contributors. This represents slightly under 10% of the number of Nigerians who are contributing pension.

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This compares unfavourably to Nigerians under 40 but above 30, who contribute the most with about 2.9 million of them representing about 39% of the pool.


Also, Nigerians between the ages of 30 and below 50 and considered the most experienced and perhaps active working population in the country have a total of about 5 million contributors and make up 66% of contributors.

A comparative look at Nigeria’s pension fund contributors and the age bracket of Nigerians who formerly employed provide another perspective.

Nigerians fully employed (age group)

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From the data above, about 15 million Nigerians aged between 25 and 34 make about 29% of Nigerians who are fully employed. Add that to the 6.4 million Nigerians between the ages of 15 and 24 and you get a combined working force of 40% of Nigerians who are fully employed.

The contrast between the number of Nigerians who are under 30 but fully employed and those who contribute to Nigeria’s RSA scheme suggest a disconnect between wages and savings.

Why are they not contributing?

Many theories could explain why Nigerians Under 30 are not contributing to Nigeria’s pension fund. Analysts suggest Nigerians under 30 are not gainfully employed and due to the small salary which they earn, find little incentive to save towards the future.

They opine that the huge income disparity between their earnings and that of those above 30 years old, discourages savings leaving them with little reason to contribute to a pension fund.

Average fresh graduates from Nigeria earn between N30,000 and N120, 000 per month depending on the organisation that employs them. Nigeria has a minimum wage of N18, 000. For most of these Nigerians who earn less than N50,000, they have to contend between paying for transport fare, feeding, clothing and investing in themselves before thinking of pension.

Another plausible reason could be the type of employers who Nigerians under 30 years old work for. Most Nigerians under the age of 30 are thought to work for SMEs and Startups as they are cheaper to hire and can be replaced more easily due to Nigeria’s high unemployment situation. Nigeria currently has a combined un(under)employment rate of 21%.

Most SMEs and Startups in Nigeria lack the requisite organisation structure to operate a contributory pension scheme focusing only on paying salaries and nothing more.

A third theory suggest most Nigerians under 30 have no incentive to contribute to a pension scheme considering that they have received nothing from the country of their birth. Most young Nigerians are unemployed and are neither paid social security nor compensation for loss of job. Most also go through University without scholarship or education subsidy and have been used to fending for themselves since they reached adult age.

What is the likely consequence

For these set of Nigerians, the implication of not contributing to pension scheme is dire for the age group and to Nigerians in general. The consequences can range for little to fall back on when they retire in the future to a serious dent to a model upon which pension funds are built upon.

According to the way pension fund contribution work, a fund that attracts less contribution from the young and upwardly mobile are more likely to face funding shortfall in the next decade or two. The less we depend on Nigerians between 30 and 50 to contribute the higher the risk that we could have more withdrawals than contributions at some point in the future. A thriving pension fund only exist when those who are younger make up a larger pool of contributors.

As millions of younger Nigerians join the labour force, the government will need to work harder at creating an enabling environment for small businesses to thrive.

A better understanding of Nigeria’s pension laws and taxes need to be communicated to Startups and Small business. Incentives need to be given to Startups and SMEs to participate in Nigeria’s contributory pension scheme, in the form of tax credits and access to funding.



  1. Brilliant and very useful article. I think the main reason for the low level of contribution by people under 30 is the general apathy by the private sector to legal compliance. There needs to be some form of penalty or sanction to make many more businesses comply with Pension laws. Pencom needs to do more beyond education.


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