Latest Developments in Nigeria’s Pension Industry (June 2025)
FGN Approves ₦758 Billion Bond to Clear Pension Backlog
In a landmark move, the Federal Government approved a ₦758 billion bond to settle outstanding pension liabilities under the Contributory Pension Scheme (CPS). This initiative aims to address accrued pension rights, pension increases since 2007, contributions to the Pension Protection Fund (PPF), and university professors' pension shortfalls. The bond is expected to be released within three months, ensuring timely and adequate retirement benefits for over 250,000 retirees.
PenCom Simplifies Retirement Benefit Payments
Effective June 1, 2025, the National Pension Commission (PenCom) has streamlined the process for disbursing retirement benefits. Pension Fund Administrators (PFAs) no longer require prior approval from PenCom to process and disburse benefits such as Programmed Withdrawal, Retiree Life Annuity, and Temporary Loss of Employment benefits. PFAs must process eligible applications within two working days, and Pension Fund Custodians (PFCs) are mandated to release payments within 24 hours of receiving instructions.
Expansion of Infrastructure Investments
PenCom is actively seeking to diversify Nigeria’s pension fund investments, which currently amount to ₦23.26 trillion (approximately $14.58 billion). The focus is shifting towards commercially viable infrastructure projects and private equity to address the nation's infrastructure deficit, projected to reach $878 billion by 2040. This move aims to enhance returns and stimulate economic growth, though current regulations limiting investments to A-rated companies pose challenges.
Introduction of Non-Interest Pension Funds
To cater to contributors seeking Shariah-compliant investment options, PenCom has inaugurated the Pension Industry Non-Interest Advisory committeee (PINAC). This committeee will guide the development and management of Non-Interest Pension Funds (Fund VI), ensuring they align with ethical and religious principles while providing competitive returns.
Living Wage Initiative for Retired Low-Income Earners
PenCom has announced plans to ensure a living wage for retired low-income earners. This initiative follows the Federal Government’s approval of the ₦758 billion pension bond and aims to strengthen financial security for all retirees under the CPS.
Equity Contribution for Residential Mortgages
PenCom has approved the use of up to 25% of Retirement Savings Account (RSA) balances as equity contributions for residential mortgages. This policy is designed to assist contributors in acquiring homes, provided they have contributed to their RSA for at least 60 months.
Micro Pension Scheme for Informal Sector
The Micro Pension Plan continues to gain traction, targeting self-employed individuals and workers in the informal sector. This initiative allows for flexible contributions, enabling a broader segment of the population to secure their retirement.
Leadership Update at PenCom
In July 2024, Omolola Oloworaran was appointed as the Director-General of PenCom, succeeding Aisha Dahir-Umar. With a background in finance and previous roles at FirstBank Nigeria and Stanbic IBTC, Oloworaran brings extensive experience to the commission.