The National Pension Commission (PenCom) has raised concerns over the slow adoption of the Contributory Pension Scheme (CPS) by most Nigerian states. Despite the Pension Reform Act (PRA) 2014 mandating public sector employees’ enrollment, only 11 states have fully implemented the scheme.
States Leading in Pension Reform
As of December 31, 2024, Lagos, the Federal Capital Territory (FCT), Osun, Kaduna, Ekiti, Edo, Ondo, Delta, Benue, Anambra, and Jigawa have fully complied. These states consistently remit both employer and employee contributions, ensuring retirees receive their benefits on time. Jigawa operates a hybrid Contributory Defined Benefits Scheme (CDBS) but was recognized for maintaining structured remittances.
States Lagging Behind
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 passed CPS laws but have made little progress in implementation. Six others—Akwa Ibom, Borno, Kwara, Plateau, Cross River, and Yobe—have not started any aspect of the scheme.
Risks of Delayed Implementation
PenCom warns that failing to adopt the CPS could lead to growing pension debts and financial instability for future administrations. The old Defined Benefits Scheme (DBS) has proven unsustainable, often leaving retirees waiting months or years for their pensions. In contrast, the CPS ensures funds are available at retirement, eliminating delays in payments.
Steps Towards Full Implementation
For states to comply fully, they need to do more than pass laws. They must establish a Pension Bureau, register employees with Pension Fund Administrators (PFAs), and begin monthly remittances. Other key steps include actuarial valuations, funding accrued pension rights, opening a Retirement Benefits Bond Redemption Fund Account, and providing group life insurance for workers.
PenCom’s Commitment
To support states, PenCom has developed a Model State Pension Law and offers technical assistance. However, the ultimate responsibility lies with state governments. Without urgent reforms, states risk accumulating pension debts and eroding public trust in the pension system.
