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According to media reports, not less than 109,284 workers within the Nigerian labour force have quit the Contributory Pension Scheme (CPS) as of the end of June 2019. The affected retirees have since withdrawn approximately N27.1 billion upon their exit from the CPS. The withdrawal of these workers was due to different reasons.

Majority of the workers affected were those who did not have up to N550,000 in their Retirement Savings Accounts (RSA) at the time of retirement and thus were paid their balances and left the scheme in accordance with the Pension Reform Act of 2014. Furthermore, some of the workers withdrew because they were offered low monthly stipends by the PFAs as a result of low funds in their RSAs.

The last set of withdrawals were foreign nationals who left the country for other countries or to their countries of origin.

Aisha Dahir-Umar, PenCom

Our major concern is on how workers end up with such meagre sums at the end of several years of hard work.  According to some industry stakeholders, irregular payment of salaries by both the private and public sector contributes significantly as pension savings can only be deducted from a paid salary. Furthermore, some employers have continued to deduct salaries of their workers for pension contributions but have failed to remit such to the PFAs.


The culture of employers failing to remit pension savings is subtly prevalent within the Nigerian labour force. However, the Acting Director-General of PenCom, Aisha Dahir-Umar restated that the commission remains committed to putting an end to the practice. The service of recovery agents remain in active use as the commission continues to review the pension records of employers with a view to recovering all outstanding balances as well as ensuring penalties are meted out to such employers.

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To resolve the problem of workers ending their years of service with inadequate RSA balances which prevents them from earning reasonable monthly pensions, the commission proposed a minimum stipend of N14,000 in the draft guidelines on the commencement of the minimum pension for retirees under the CPS.  A Fund called the Pension Protection Fund was to be established in respect of the guaranteed minimum pension.

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According to the Act, funds for the minimum guaranteed pension would be partly obtained from an annual subvention of 1% of the total monthly wage bill payable to employees in the public service of the federation and returns from pension fund investments. It would also be funded from the annual pension protection levy paid by PenCom and all licensed pension operators at a rate to be determined by the commission from time to time. However, 5 years since the passage of the Pension Reform Act, the minimum pension scheme is yet to be implemented.

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While we are of the view that the implementation of the minimum pension scheme needs to be prioritised, we believe that strong punitive measures should be put in place for employers who fail to remit pensions funds. A well-run pension scheme is essential to bolster a generation of independent retirees which bodes well for society at large.




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  1. This analysis is ignoring the impact of continuous sacking of workers by big organisations. Most of the sacked workers who are in desperate need of funds have no choice than to turn to their pension for survival.


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