PenCom DG says proposed pension contribution increase applies only to employers

The Director-General of the National Pension Commission (PenCom), Ms. Omolola Oloworaran, has clarified that the proposed increase in pension contribution rates under the ongoing review of the Pension Reform Act (PRA) 2014 will apply only to employers and not employees.

Oloworaran made the clarification on Wednesday while reacting to a video commentary by Nairametrics founder and CEO Ugochukwu Obi-Chukwu on the proposal.

The clarification comes a day after PenCom disclosed plans to raise statutory pension contribution rates as part of efforts to strengthen retirement security and improve the sustainability of the Contributory Pension Scheme (CPS).

What they are saying

Addressing the concerns in a post on X, Oloworaran stressed that any proposed increase relates solely to employer contributions and not deductions from workers’ salaries.

• “For the avoidance of doubt, my comments were in relation to employer pension contributions, not employee contributions,” she stated.
• “Engagements with organised labour, employer associations and other key stakeholders are still ongoing, and no final decision has been taken. Nigerians should rest assured that PenCom will not introduce any reform that makes life harder for ordinary Nigerians.”

She added that any eventual reform would be based on consultations and evidence, with the objective of strengthening retirement security while balancing the interests of workers, employers, and the broader economy.

More insights

Under the current pension framework, employers are required to contribute a minimum of 10% of an employee’s monthly emoluments, while employees contribute 8%, resulting in a combined minimum pension contribution of 18%.

PenCom is proposing an upward review of the employer contribution component as part of the broader pension reform process.

Speaking at the 2026 Pension Consultative Forum for States, the Federal Capital Territory (FCT), and Licensed Pension Fund Operators (LPFOs) in Lagos on Tuesday, the PenCom chief said the commission was engaging organised labour, employer groups, and members of the National Assembly on proposed amendments to the PRA 2014.

The consultative forum, according to the commission, is designed to deepen stakeholder engagement and support efforts to align state pension systems with national standards under the CPS.

Concerns over state compliance

Oloworaran also reiterated concerns over the low level of compliance with the CPS among state governments, revealing that only eight of Nigeria’s 36 states are currently implementing the scheme in line with legal requirements.

• “I am not satisfied at all with where we are,” she 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.”

To encourage wider adoption of the scheme, the PenCom DG disclosed that the commission is exploring mechanisms to create sustainable revenue streams 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.

Warning against unremitted pension deductions

Oloworaran also criticised the practice of some state governments 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.”

What you should know

Nigeria’s pension assets climbed to a record N31.32 trillion in May 2026, according to PenCom’s unaudited industry report released on June 29, 2026.

The figure represents a 1.23% increase from N30.94 trillion recorded in April, with pension assets expanding by approximately N384.98 billion within one month.

On a year-on-year basis, total pension assets grew by 29.5% from N24.18 trillion in May 2025, underscoring the continued growth of the pension industry and the increasing importance of retirement savings in Nigeria’s financial system.

The Pension Reform Act 2014, currently under review, succeeded the PRA 2004, which introduced the Contributory Pension Scheme and established PenCom as the regulator of the country’s pension industry.