The National Bureau of Statistics (NBS) has reported that only approximately 26.3 percent of Nigerian workers had subscribed to a pension plan or health insurance policy in 2023.
A pension plan involves employer contributions to a fund dedicated to providing retirement benefits, while health insurance is a contract where a company covers part of a consumer’s medical expenses in exchange for a monthly premium.
This statistic was highlighted in the latest Nigeria Labour Force study by the NBS, which noted that Zamfara State had the highest proportion of employees with pension and health insurance, at 65 percent. In contrast, Abia State reported the lowest, with just 3.9 percent of wage employees enrolled in such plans.
The report indicates that the overall low percentage of workers with pension and health insurance can be attributed to the significant presence of informal sector workers in Nigeria, which constitutes about 92 percent of the employed population. The National Pension Commission (PenCom) has noted that only 25 states, including the Federal Capital Territory (FCT), have enacted pension laws regarding the Contributory Pension Scheme (CPS), while six states are in the process of doing so.
Omolola Oloworaran, acting director-general of PenCom, stated that six states have adopted the Contributory Defined Benefits Scheme (CDBS), and only eight of the 25 states are fully implementing the CPS.
She also mentioned that pension fund assets under the CPS have grown significantly, reaching ₦20.79 trillion as of July 2024. “We are pleased to report a consistent flow of contributions from states, with over ₦236.7 billion remitted between January 2020 and the second quarter of 2024,” she stated.
Oloworaran emphasized that one of the key advantages of adopting the CPS is the opportunity for state governments to access accumulated pension funds for infrastructure development through the issuance of state bonds. Notably, five states, including Lagos, Niger, Osun, Ekiti, and Delta, have successfully issued bonds subscribed to by pension funds, contributing to projects such as the Lekki-Ikoyi Bridge in Lagos.
The commission remains committed to ensuring timely retirement benefits for all public and private sector retirees.
The informal sector is characterized by its lack of formal regulations, resulting in businesses that often lack organizational structures, experience inconsistent earnings, and do not provide social benefits such as pensions for workers.
According to recent reports from the International Monetary Fund (IMF), Nigeria’s informal sector contributed 57.7 percent to the nation’s GDP in 2022, underscoring its vital role in the economy. However, millions of Nigerians in this sector remain excluded from traditional pension systems, leaving them vulnerable to poverty in retirement.
Employee benefits such as health insurance, pensions, annual leave, and work-life balance initiatives are crucial for enhancing job satisfaction, which can, in turn, lead to improved productivity and employee loyalty.
