…Targets 3m new accounts

…Sets June 2027 deadline for operators’ recapitalisation

Private sector workers in Nigeria are retiring with inadequate pensions, with almost 70% earning below the national minimum wage in retirement, the National Pension Commission (PenCom) has said, pushing for reforms to expand coverage, improve retirement benefits and strengthen the pension industry.

Omolola Oloworaran, Director-General of PenCom, stated this at the Summit Day of the National Pension Week 2026 in Abuja on Thursday, warning that the Country’s pension system must move beyond accumulating assets to ensuring that workers can maintain a dignified standard of living after retirement.

She said more than 55% of retirees whose pensions fall below the minimum wage come from the private sector, highlighting the gap between pension contributions and the benefits workers ultimately receive.

She argued that the problem was partly linked to the calculation of pension contributions on pensionable earnings rather than workers’ full earnings, leaving some employees with retirement benefits based on only a fraction of their actual pay.

Under the existing framework, the combined mandatory pension contribution is 18% of an employee’s monthly emoluments, comprising 10% from the employer and eight percent from the employee. However, Oloworaran noted that the contribution base limits the amount ultimately saved for retirement.

She contrasted Nigeria’s system with Australia, where a 12% employer contribution rate applies to workers’ ordinary earnings, saying Nigeria’s higher nominal contribution rate does not necessarily translate into better retirement outcomes.

“Our private sector workers are retiring into poverty. This must change.

“A worker can earn a decent wage and still retire on a pension calculated from just a fraction of it,” Oloworaran said.

The PenCom DG called on private sector employers to contribute more meaningfully to efforts to guarantee minimum retirement benefits, noting that the Federal Government and the pension industry were already contributing to the Pension Protection Fund.

She urged employers to support the fund so that the cost of protecting low-income retirees would not rest on public resources alone.

“The Federal Government is contributing to the Pension Protection Fund. The pension industry is contributing. It is time for the private sector to join them so that the minimum pension guarantee rests on the shoulders of all who benefit from the labour of Nigerian workers and not on the public purse alone,” she said.

Oloworaran also warned that pension adequacy depended not only on contributions but on the ability of pension fund administrators to generate returns that outpace inflation.

“A contribution that is faithfully paid and then quietly eroded by inflation is a promise broken in slow motion. The only return that matters to a retiree is the real return when our savings end above the rising prices.” she said, adding that delivering returns above inflation was a responsibility of pension operators.

She said the Commission would use the powers available under the Pension Reform Act to recover unpaid contributions and address employers’ non-compliance, describing the failure to remit deducted pension contributions as a threat to workers’ future financial security.

“When an employer deducts workers’ pension contribution and fails to remit it, that is not an administrative lapse. It is a step from the future of a Nigerian family,” she said.

As part of efforts to extend pension coverage beyond formal employment, Oloworaran said PenCom had secured commitments from pension fund administrators to open three million additional funded active pension accounts within one year.

The initiative is intended to bring more informal-sector workers, including traders, artisans, farmers, transport workers and self-employed Nigerians, into the Contributory Pension Scheme through personal pension plans, accredited pension agents and digital onboarding.

“For 20 years, our scheme has followed the salaries. Now it must follow the worker to the market, to the motor park, the farm cluster, and the food in every pocket,” she said.

She stressed that the target was for funded active accounts rather than registrations alone, arguing that opening an account without contributions would do little to secure a worker’s retirement.

“An empty account is a statistic, but a funded account is a future,” she said.

The expansion drive forms part of what Oloworaran described as a shift from a pension system focused largely on payroll workers to one that protects a broader share of the population.

She said a national pension system should not exclude people simply because they work outside the formal employment structure, adding that the personal pension plan would provide a pathway for self-employed Nigerians to save towards retirement.

Minimum pension guarantee, healthcare plan

Oloworaran also announced that President Bola Tinubu was expected to launch a Pension Security Initiative on November 10, subject to the stated schedule.

According to her, the initiative would include a minimum pension guarantee and a healthcare programme for retirees, which she referred to as Pancare.

She said the minimum pension guarantee, contemplated under Sections 82 and 84 of the Pension Reform Act 2014, should no longer remain an unfulfilled promise after years of waiting.

The initiative is intended to provide a safety net for the poorest retirees and reduce the risk of older Nigerians having to choose between essential medicines and food.

“No Nigerian who has served and worked for this nation and has saved for retirement should grow old in want,” she said.

Oloworaran described the planned intervention as a shift from merely encouraging retirement savings to providing a stronger measure of security for pensioners.

She also emphasised that the effectiveness of the initiative would depend on sustainable funding, employer participation and a pension system capable of protecting the value of contributors’ savings.

Operators face June 2027 recapitalisation deadline

In a separate measure to strengthen the industry, Oloworaran said all pension fund administrators and pension fund custodians must complete their recapitalisation by June 30, 2027.

“We are not changing our minds,” she said, insisting that the commission would hold operators to the deadline.

She said recapitalisation was intended to ensure that institutions managing the retirement savings of millions of Nigerians had the financial strength to protect contributors’ funds and meet their responsibilities.

The Commission also expects operators to improve investment discipline, align investment strategies with the periods when contributors will need their money and deliver returns that preserve the purchasing power of pension savings.

“Size is what we have achieved. Strength is what we now demand,” Oloworaran said.

She added that the next phase of pension reform would focus on improving the quality of the industry rather than merely increasing the volume of assets under management.

Pension assets to support development

Oloworaran said Nigeria’s pension assets could help finance infrastructure, housing, power and enterprise, provided investments were made with prudence, transparency and sound risk management.

She cautioned, however, that pension savings must not be treated as government funds or as resources that could be deployed without regard to contributors’ interests.

“Pension money is not government money. It is not industry money. It is the deferred wages of Nigerians and working Nigerian workers,” she said.

According to her, investments in national development should first deliver appropriate risk-adjusted returns and protect the interests of contributors before producing wider economic benefits.

“Nigerian savings can finance the power, the roads, housing, and enterprise that will create the next generation of contributors. Every investment must first serve the contributor. When it does, it can also serve the country,” she said.

She added that the Commission would continue to press for stronger compliance, better investment performance and wider pension coverage, while calling on state governments to complete the transition to the Contributory Pension Scheme.