CPS: PenCom Sustains Push for States, Others

The National Pension Commission has sustained the drive for states, local governments and employers in formal sector to fully embrace the Contributory Pension Scheme, writes Ebere Nwoji

One of the major headaches of the present leadership of the pension sector regulatory authority, the National Pension Commission (PenCom), is how to succeed in making every Nigerian with genuine means of livelihood enrol into the Contributory Pension Scheme (CPS).

The commission said the overall aim is to ensure that at advanced age, every Nigerian retires with no stress, dignity and have something to fall back on in form of periodic benefits payment  by the various Pension Fund Administrators from his or her retirement Savings Account whether the person worked for government, private sector or as a personal business operator.

PenCom Director General, Ms Omolola Oloworaran, makes no pretence in her efforts to achieve this desire, as she said she would use every instrument at her disposal to ensure success.

As part of effort to achieve this, between last year, 2025 and this year, PenCom has put in place a number of reforms and initiatives and one of them is the reform she tagged, “Pension Revolution 2.0,” launched mid 2025.

PenCom is also collaborating with relevant bodies that would mobilise workers to save more and make employers improve on their benefit payment to retired workers.

She instituted the bi- annual Pension Leadership Council (PILC) as well as periodic round table conference with the leadership of the workers’ union, the Trade Union Congress (TUC ) to solicit their support in the fight to have all workers and their employers key into the scheme and ensure  the proposed more payment to workers at retirement .

Pension Revolution

The commission anchored these reforms and initiatives on the Pension Revolution 2.0, which has as its strategic roadmap the deepening of coverage of pension among Nigerians. To improve efficiency, and unlock pension funds for infrastructure without compromising retirement security.

It rebranded the Micro Pension scheme, Personal Pension Plan, expanded and simplified it to be more attractive to the informal sector operators such as traders, artisans and other self-employed people.

Still under the revolution the commission instituted voluntary contributions and encouraged employees to contribute above the mandatory 8 percent to boost retirement savings.

PenCom also promoted enforcement and compliance stricter sanctions for defaulting states and private employers, including real-time remittance tracking.

All these efforts, according to PenCom, are geared towards ensuring that more working Nigerians including the youths are captured in pension plan.

State, local government Challenge

One of the key challenges to the commission, which for now, it lacked the necessary powers to enforce is how to make workers of state and local governments join the CPS net.

It is indeed a challenge which PenCom, despite the doggedness of its present administration, lacked power to enforce because of legal involvement.

The intents and purposes of the Pension Reform Act 2014 was to ensure the domestication of the CPS at the sub-national level in Nigeria. This is enshrined in Section 2(1) of the PRA 2014 which made the provisions of the Act applicable to any employment in the public service of the federation, the Federal Capital Territory, the states and local government councils as well as the private sector.

However, Section 210 of the Constitution of the Federal Republic of Nigeria 1999 (as amended), stated that the right of a person in the public service of a state to receive pension or gratuity shall be regulated by law. This therefore implies that federating units were at liberty to legislate on the domestication of the CPS within their various states.

According to PenCom, out of 36 states of the federation, 24 states have enacted laws on the CPS. The enactment of these laws which are substantially in tandem with the provisions of the PRA 2014 is the first major step towards the domestication of the CPS at the sub-national level. Meaning that after 22 years of implementing the CPS, these 24 states are still operating outside the scheme.

It was learnt that some state governments are more comfortable in their prevailing zone outside the CPS to avoid PenCom’s regulatory drive on remittances.

In addition, six states have drafted CPS bills and are undergoing the legislative processes towards their passage into laws.

However, the following states have fully complied with the scheme and are remitting both the workers’ and employers’ contributions:  Lagos, Ekiti, Jigawa, Kaduna, Kastina, Niger, Ondo, Osun and Sokoto states.

On the other hand, three states have embarked on pension reform but chose not to adopt the CPS while one has elected to continue with the Defined Benefit Scheme (DBS).

Surmounting the Challenge

But PenCom under the leadership of Oloworaran, seems not to mind any boundary in its efforts to bring everybody under CPS.

Currently, Oloworaran and her team of pension fund managers are pushing for full domestication of CPS among state governments. PenCom, under Oloworaran, is actively engaging defaulting states with technical support and compliance deadlines.

She has insisted that non-compliant states should now face financial sanctions in form of monthly interest on unpaid contributions and public naming.

She also put in place framework to help states convert legacy Defined Benefit Liabilities into funded CPS arrangements.

These efforts are already yield results as Micro Pension Plan which her predecessor experimented for four years without tangible results has within this her short period on seat attracted over 3 million informal workers on enrolment up from 500,000 who enrolled between 2019 and 2023. 18 states now fully complied with CPS up from 11 in 2024.

Formal sector employers’ Challenge

But the PenCom DG said while she is making progress, compliance by the formal sector employers has remained a big challenge.

At the recent round table conference with Trade Union Congress of Nigeria (TUC), the PenCom boss lamented about non-compliant attitude of some formal sector employers saying, “Compliance among formal sector employers has remained a major challenge”.

She vowed to make life very unbearable and uncomfortable for employers who do not put in place pension plan for their employees and solicited the support of the labour unions in this regard.

Oloworaran said the round table discussion with the TUC was part of her ongoing stakeholder engagement frame work for ensuring that all Nigerian workers retire with dignity.

According to her, henceforth, there would be no hiding place for employers without adequate pension plan for their employees insisting that she would use every instrument at her disposal to make life unbearable for them.

She said the worst scenario was employers who deduct workers’ money but fail to remit same to their Retirement Savings Account (RSA).

“The reforms we have put in place are very important, I see brighter days ahead for pension but the challenge is compliance with formal  sector. It is indeed a challenge we  had meeting with one of the labour chapter person on how they will support us  for compliance  and she is a very nice person we want collaboration with TUC and other labour unions on compliance by  employers we want to make life uncomfortable for employers who are not contributing to workers’ pension  we want to use everything at our disposal the TUC, NLC,  including ICPC so that we don’t have people  who continue to work but employers are not putting up pension”, she stated. 

She said the commission was on a strong footing to move pension sector forward so that workers would not retire with pains.

Analysts View

Pension sector analysts suggested that since the constitution of the country especially as it affects pension is the reason for PenCom’s lack of powers to compel state and local governments to fully key into the CPS, the senate in its recent approval  on amendment to pension, health, teaching hospitals among others should look into the direction of state governments compulsorily keying into the CPS. This, in their view, will bring a shift to the present situation in the country where some state government workers retire with arrears of salaries being owed while issue of pension is swept under the bed.