A] Prelude
For more information on pension systems, risk and coverage, feel free to visit our dedicated webpages:
https://expatpensionholland.nl/global-pillars-systems
https://expatpensionholland.nl/global-investments-risks-0
https://expatpensionholland.nl/global-social-security-coverage
For even more information feel free to visit the following external sites:
https://www.pencom.gov.ng/
https://kpmg.com/ng/en/home/insights/2024/12/2024-nigeria-pension-industry-customer-experience-survey.html
B] The struggle for a secure Nigerian retirement
I] The Issue
Across the African continent, the aspiration for a peaceful and financially secure retirement has remained a common dream for generations. For many today, particularly in Nigeria that vision is becoming increasingly difficult to attain. The harsh realities of the current economic landscape, defined by soaring inflation, a continually rising cost of living, and limited access to pension schemes for millions of workers, especially those in the informal sector, have made retirement planning more complex and uncertain than ever.
In Nigeria, as in many parts of the world, retirement is typically triggered by age, health challenges, or the completion of the statutory 35 years of service, especially within the public sector. According to Nigeria’s Public Service Rules, the mandatory retirement age for civil servants is 60 years or 35 years of pensionable service.
Yet, instead of marking the beginning of a period of rest and fulfillment, retirement is often viewed by many as the start of financial hardship. For a significant number of workers, the absence of a regular monthly income after retirement presents a daunting reality.
Countless retirees are left grappling with the burden of meeting basic needs ranging from food and shelter to increasing healthcare costs. This transition, often devoid of a reliable safety net, generates a deep sense of anxiety in a country where social welfare systems remain inadequate.
II] CPS
In response to growing concerns over the inadequacies of the former pension structure, Nigeria implemented the Contributory Pension Scheme (CPS), a reform intended to replace the flawed and corruption-prone defined-benefit system. The CPS was introduced as a means to ensure sustainable financial support for retirees through a more transparent and accountable system. However, despite its potential, the scheme’s reach remains disappointingly limited.
III] Critical Review
A report reveals that only about 15 per cent of Nigeria’s labor force—approximately 10.5 million individuals are currently enrolled in the CPS. This statistic highlights the vulnerability of the majority workforce, many of whom remain outside the formal pension safety net and continue to depend on personal savings or support from extended families—an arrangement that is proving increasingly unreliable in today’s economic climate.
In light of Nigeria’s persistent economic pressures, experts and stakeholders in the insurance and financial sectors have urged Nigerians to take greater ownership of their retirement planning. This call was a central theme at a recent industry summit focused on the future of retirement in Nigeria. Bringing together a wide spectrum of participants—including industry experts, policy stakeholders, insurance professionals, and financial advisors—the summit served as a platform to address the deep-rooted challenges confronting Nigeria’s retirees and to explore sustainable solutions for financial security in old age.
During the event, Olusegun Omosehin, the chief executive officer of the National Insurance Commission (NAICOM) and commissioner for Insurance, represented by Julius Odidi, the Lagos State director of NAICOM, highlighted the critical role that long-term financial planning and risk management play in securing a stable and reliable retirement.
IV] Planning
Omosehin underscored the necessity of proactive retirement savings and investment strategies, stressing that individuals should adopt a long-term perspective to counteract the challenges posed by inflation, market fluctuations, and demographic shifts.
He noted, “The reality today is that more individuals are nearing retirement with significant concerns about the sustainability of their income, healthcare costs, and the adequacy of their pension savings. These are not just abstract figures—they reflect the daily struggles of millions of Nigerians.” The CEO called upon all stakeholders, including regulators, insurers, pension administrators, and policymakers, to confront these challenges with innovation, empathy, and resilience. “As regulators and industry leaders, we must rise to the occasion and ensure that our systems are equipped to safeguard the financial future of our citizens,” he stated.
In his address, Omosehin stressed that effective retirement planning should be anchored in financial protection and robust risk management. He emphasised the importance of tools such as annuities, life insurance, and structured retirement savings plans, which play a pivotal role in ensuring long-term financial stability. “These financial instruments are not just tools—they are critical components for providing peace of mind in later life. We must make sure that these products are accessible, transparent, and responsive to the evolving needs of our aging population,” he explained.
Omosehin further advocated for policy alignment across the insurance, pension, and financial sectors. He emphasised that regulations must focus on long-term goals, rather than reactive, short-term solutions. He also called for increased financial literacy, particularly for workers in the informal sector who often lack access to formal retirement plans.
V] Products
Highlighting the need for closer cooperation between insurers, regulators, and policymakers, Omosehin urged for the development of innovative and inclusive retirement products. He suggested leveraging micro-insurance and digital platforms to extend coverage and ensure that no segment of the population is left behind. “We must ensure that our policies across the various sectors are in harmony. Regulation should be enabling, responsive, and focused on creating long-term value rather than immediate returns,” he concluded.
VI] CPS Compliance
Funmi Sesi, the chairperson of the Nigeria Labour Congress (NLC) Lagos Chapter, called on all levels of government to ensure full compliance with the Contributory Pension Scheme (CPS). She highlighted that only six states are fully adhering to the policy, which remains a significant challenge in achieving broader pension coverage across the country.
Sesi also emphasised the critical importance of timely gratuity payments to retirees. She cautioned that delays in these payments could lead to financial instability for retirees, underlining the need for efficient processing and disbursement of funds. According to Sesi, a failure to prioritise this could have far-reaching consequences, not only for retirees but also for the overall pension system’s credibility and sustainability.
Additionally, Babatunde Oguntade, President of the Nigerian Council of Registered Insurance Brokers (NCRIB), proposed a forward-thinking approach to pensions. He recommended that pensions should start from the very first day of a child’s life. “The moment a child is born,” Oguntade said, “they should receive a national identification number, and the government should set aside a small amount for their pension. By the time they enter the workforce, financial literacy and discipline would have already been instilled.” This, he believes, would contribute to a more financially aware and prepared future generation.
C] Nigerian Pension Industry
I] The Issue
The Director-General of the National Pension Commission, Omolola Oloworaran, has lamented the negative growth recorded in the pension industry since 2021. Oloworaran expressed this concern at the 2025 Pension Industry Leadership Retreat organised under the theme, ‘Sustainable Retirement – Strategic Blueprint for Economic Development and Inclusion.’
II] The Details
The Pension Reform Act 2004 empowers PenCom to regulate, supervise and ensure the effective administration of pension matters in Nigeria. The functions of the Commission include: Regulation and supervision of the Contributory Pension Scheme established under the Act.
The PenCom DG said the theme of the retreat challenges stakeholders to reimagine the future of pensions in Nigeria, “To protect and grow retirement savings and to unlock the transformative power of pension assets as catalysts for national development.
“Over the past two decades, our industry has achieved remarkable milestones, over N23tn in assets under management, more than 10 million contributors, and a regulatory framework that is globally respected. But we must also confront an uncomfortable truth, the pension industry is no longer growing in real terms.
Since 2021 it’s unfortunate, it’s been a negative growth trajectory, and I would like us to focus on that today, we are also witnessing a concerning trend where pension fund administrators are merely transferring retirement savings account balances amongst themselves with limited net new contributions or meaningful expansion into untapped segments.
This is not good and it must change. If we remain on this trajectory, we risk managing a mature but stagnant system.”
III] New Approach Required
She added that what was required was “exponential growth, growth that opens access to over 77 million informal sector workers, of whom, as at today, less than 10,000 of them are active contributors under the CPS, growth that fuels infrastructure and food security, two of Nigeria’s most urgent national priorities, growth that delivers real returns and preserves dignity in retirement. Globally, we have seen how pension funds have transformed national economies across the world.
IV] Lessons From Other Countries
“We have seen financing of infrastructure in developed countries like Australia, but also right here in Africa, like South Africa, we’ve seen housing developments supported by pension funds in Chile, and we’ve seen pension funds also powering green energy and technology innovation in Canada and the Netherlands.
These countries achieved impact not by playing it safe, but by balancing prudence with bold, forward-looking strategies that protected savers while enabling long-term national development. We must do the same.” Oloworaran maintained that for the sector to contribute significantly to the economy, there may be a need to make some changes.
V] Active Towards The Future
“The Pension Reform Act places on us the responsibility of protecting and growing retirement savings accounts. This is not a passive obligation. It is a charge to act. We need to take bold yet calculated decisions. We need to evolve our investment guidelines. We need to deepen financial markets. We need to foster innovative financial market products, and above all, we need to bring every working Nigerian, regardless of their status, into the pension system.
“This retreat presents an opportunity to ask ourselves the hard but necessary questions:
- How do we redesign the pension framework to be viable and attractive to all workers, ensuring healthy returns and a living wage for all retirees?
- How do we unlock infrastructure and food security financing without compromising safety and liquidity?
- How do we deepen our markets to support alternative assets whilst maintaining prudence and preserving value?
- How do we leverage technology and data to transform the pension industry?
- And how do we measure success, not just the naira value or dollar value, but by impact, impact on people’s lives?
The Nigerian pension industry has the power to shift the development trajectory of our country,” she asserted!