The National Pension Commission (PenCom) has called on state and local governments to fully adopt and implement the Contributory Pension Scheme (CPS) to ensure a secure retirement system across Nigeria.
In a statement issued in Abuja, PenCom emphasized that the Pension Reform Act (PRA) 2014 mandates the CPS for all public sector employees at the federal, state, and local government levels, as well as in the private sector.
However, the 1999 Constitution (as amended) grants state governments the authority to legislate on pension matters within their jurisdictions. To facilitate CPS adoption, PenCom developed a Model State Pension Law, allowing states to customize it based on their specific needs. The commission also reviews draft pension laws and provides guidance throughout the implementation process. Despite these efforts, many states are yet to fully implement the scheme.
For full compliance, states must:
- Enact a CPS law.
- Establish a Pension Bureau.
- Register employees with Pension Fund Administrators (PFAs).
- Begin remitting pension contributions.
- Conduct an actuarial valuation.
- Fund accrued pension rights.
- Procure group life insurance for employees.
- Open and fund a Retirement Benefits Bond Redemption Fund account with the Central Bank of Nigeria (CBN) or a PFA.
PenCom commended Lagos, the Federal Capital Territory (FCT), Osun, Kaduna, Ekiti, Edo, Ondo, Delta, Benue, Anambra, and Jigawa for their exemplary implementation of the CPS as of December 2024. These states consistently remit both employer and employee contributions, ensuring retirees receive their entitlements promptly. Jigawa, however, operates under the Contributory Defined Benefits Scheme (CDBS).
Several states, including Abia, Adamawa, Bauchi, Bayelsa, Ebonyi, Enugu, Gombe, Imo, Kano, Katsina, Kebbi, Kogi, Nasarawa, Niger, Ogun, Oyo, Rivers, Sokoto, Taraba, and Zamfara, have enacted CPS laws but are yet to fully implement them. PenCom urged these states to accelerate their efforts and ensure timely remittance of pension contributions.
Meanwhile, Akwa Ibom, Borno, Kwara, Plateau, Cross River, and Yobe have yet to commence CPS implementation. PenCom called on these states to expedite the enactment of their CPS laws and take immediate steps toward full compliance to secure a sustainable pension system for their workforce.
The transition from the Defined Benefits Scheme (DBS) to the CPS is crucial in addressing pension liabilities. Failure to adopt the CPS could exacerbate pension debts, creating long-term financial burdens for future administrations. By implementing the CPS, states can prevent escalating pension costs and provide financial security for retirees.
PenCom reaffirmed its commitment to supporting non-compliant states through technical assistance and regulatory oversight. The commission urged all states to take decisive action in safeguarding the financial future of their workers, emphasizing that a sustainable pension system is essential for economic stability.
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