Nigeria’s Contributory Pension Scheme (CPS), established to secure retirement benefits for workers, faced a significant setback as new membership enrollment plummeted by 38 percent from 2017 to 2021. According to a 2022 report, persistent non-compliance by 22 states has blocked N127 billion in pension contributions, threatening the financial security of workers and retirees. This decline highlights systemic challenges in implementing the CPS, raising concerns about Nigeria’s pension system and its impact on old-age poverty.
Declining Enrollment Trends
Data from the National Pension Commission (PenCom) revealed a consistent drop in new Retirement Savings Accounts (RSAs) created under the CPS between 2017 and 2021, with a brief uptick in 2018. New memberships fell from 411,258 in 2017 to 257,462 in 2021, a 38 percent decline. The year-on-year figures tell a stark story: a 11 percent drop in 2017 from 462,632 in 2016, a 57 percent surge to 645,346 in 2018, followed by declines of 26 percent in 2019 (480,279), 33 percent in 2020 (322,129), and 20 percent in 2021.
This downward trend also slowed the overall growth of CPS membership. Total membership rose from 6.885 million in 2016 to 9.529 million in 2021, but annual growth rates declined steadily from 7.6 percent in 2016 to 2.8 percent in 2021. Quarterly data for 2021 showed a similar pattern, with membership growth dropping from 0.91 percent in Q1’21 to 0.71 percent in Q4’21, underscoring a persistent slowdown.
Non-Compliance by States
A major driver of this decline is the failure of 22 states to comply with the Pension Reform Act 2014, which mandates employers to contribute 10 percent of employees’ monthly emoluments to RSAs, with employees contributing 8 percent. The non-compliant states include Kebbi, Rivers, Plateau, Borno, Akwa Ibom, Cross River, Bauchi, Katsina, Ondo, Niger, Ogun, Kwara, Bayelsa, Kogi, Abia, Taraba, Imo, Sokoto, Adamawa, Ebonyi, Nasarawa, and Enugu. This non-compliance blocked approximately N127 billion in pension contributions in 2021, based on a combined wage bill of N714.7 billion for these states.
Of these states, 16 have enacted pension laws but failed to implement them, while six others—Plateau, Cross River, Borno, Akwa Ibom, Bauchi, and Katsina—have yet to pass pension legislation. Only four states—Lagos, Kaduna, Edo, and Benue—fully comply with the CPS, while five states (Osun, Delta, Ekiti, Anambra, and Ondo) and the Federal Capital Territory show partial compliance.
Economic and Social Implications
The lack of compliance has severe consequences, pushing retirees into poverty and leaving active workers at risk of financial insecurity upon retirement. Stakeholders, including the Centre for Pension Right Advocacy, warned that non-compliance deprives families of benefits in cases of a worker’s death, exacerbating economic hardship. Ivor Takor, the Centre’s Executive Director, argued that governors’ failure to implement pension laws violates Nigeria’s 1999 Constitution, potentially constituting grounds for impeachment under Section 188(2)(b) for gross misconduct.
PenCom has made efforts to address the issue through sensitization workshops, capacity-building programs, and direct engagements with state governors and agencies. Despite these initiatives and worker agitations, progress remains slow, hindered by states’ autonomy over pension schemes.
Stakeholder Perspectives and Solutions
Stakeholders emphasized the urgency of addressing non-compliance. Idu Okwuosa, Managing Director of Access Pension Fund Custodian, called it “immoral” for states to neglect pension contributions while seeking to borrow from pension funds contributed by others. Glory Etaduovie, former Managing Director of IEI-Anchor Pensions, stressed that pensions are a cornerstone of wealth creation and social stability, urging states to prioritize compliance to secure workers’ futures.
To move forward, Takor suggested that non-compliant governors face legal accountability for violating constitutional pension rights. PenCom’s ongoing engagement with states, including courtesy visits to governors, aims to drive adoption of the CPS. Stakeholders also called for reduced corruption and greater transparency in state financial processes to ensure pension funds are remitted effectively.
