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The National Pension Commission (PenCom) has announced plans to introduce dedicated funding mechanisms for state pension bureaus as part of broader efforts to strengthen pension administration and improve compliance with the Contributory Pension Scheme (CPS) across Nigeria.
The initiative is aimed at providing state pension agencies with sustainable financial support while encouraging more state governments to fully implement the CPS and enhance retirement security for public sector workers.
PenCom Director-General, Omolola Oloworaran, disclosed the proposal during the 2026 Consultative Forum for States, the Federal Capital Territory, and Licensed Pension Fund Operators, held in Lagos.
She explained that the Commission is considering new approaches to create reliable income streams for state pension bureaus following concerns raised by state officials about operational funding challenges.
“We have listened to their concerns, and they have raised valid points. While the solution may not take the exact form proposed, PenCom is committed to developing sustainable income streams that will strengthen the operations of state pension bureaus,” Oloworaran said.
PenCom Raises Concerns Over Low CPS Adoption
Despite years of pension reforms, PenCom revealed that only eight out of Nigeria’s 36 states have fully implemented the Contributory Pension Scheme, highlighting the slow pace of adoption at the sub-national level.
Describing the level of compliance as unsatisfactory, Oloworaran urged state governments to demonstrate stronger political commitment toward safeguarding workers’ retirement benefits.
“I am not satisfied with our current level of progress. If I were to grade compliance, it would still be an ‘F9.’ Only eight states are fully implementing the CPS. Governors must place greater priority on securing the future of their workforce, not just addressing present-day concerns. Every state should operate under the Contributory Pension Scheme,” she stated.
Commission Warns Against Withholding Pension Contributions
PenCom also expressed concern over practices in some states where pension contributions deducted from employees’ salaries are retained in government accounts instead of being remitted promptly into individual Retirement Savings Accounts (RSAs).
According to the Commission, such practices expose workers’ retirement savings to financial and political risks, particularly during changes in government.
Oloworaran warned that pension deductions should never be treated as part of general government funds.
“In my view, employee pension deductions should never be kept in state government accounts. A new administration may not fully understand the purpose of those funds, creating the risk of diversion. This only increases pension liabilities and weakens the entire retirement system. PenCom will continue engaging affected states to end this practice,” she said.
Pension Reform Act Review Under Consideration
PenCom also confirmed that consultations are ongoing with organised labour, the National Assembly and other key stakeholders on proposed amendments to the Pension Reform Act (PRA).
Among the issues under discussion is a possible increase in mandatory pension contribution rates to reflect current economic conditions and strengthen the long-term sustainability of Nigeria’s pension system.
“We are actively engaging all relevant stakeholders on the review of the Pension Reform Act. While contribution rates are expected to increase, any decision will be reached through broad consultation and consensus,” Oloworaran noted.
Lagos Reaffirms Commitment to Pension Administration
During the forum, the Director-General of the Lagos State Pension Commission (LASPEC), Babalola Obilana, who represented the Lagos State Head of Service, Bode Agoro, reaffirmed the state’s commitment to effective pension management.
He said Lagos remains focused on prompt remittance of pension contributions, timely payment of retirement benefits and continuous institutional reforms to strengthen pension administration.
Strengthening Nigeria’s Pension System
PenCom reiterated that nationwide adoption of the Contributory Pension Scheme remains essential to eliminating unfunded pension liabilities and ensuring retirees receive their benefits without unnecessary delays.
Nigeria introduced the CPS through the Pension Reform Act of 2004, later updated by the Pension Reform Act 2014, to replace the former Defined Benefit Scheme, which was characterised by inadequate funding, delayed pension payments and mounting liabilities.
The Commission noted that the annual Consultative Forum continues to serve as an important platform for collaboration between PenCom, state governments and pension industry stakeholders, helping to improve policy implementation, strengthen governance and promote uniform pension administration across the country.
The renewed focus on sustainable funding, stronger compliance and legislative reforms underscores PenCom’s commitment to building a more resilient pension system capable of protecting workers’ retirement savings while supporting long-term fiscal sustainability.
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