The National Pension Commission (PenCom) on Wednesday disclosed that only 11 states across Nigeria have fully implemented the Contributory Pension Scheme (CPS), warning that continued delays by others risk exacerbating long-term pension liabilities and placing unsustainable financial burdens on future administrations.
In a statement Wednesday, the commission expressed concern over the sluggish adoption of the scheme by most subnational governments, despite its clear provisions under the Pension Reform Act (PRA) 2014.
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The Act mandates that all public sector employees—including those in the Federal Capital Territory, states, and local governments—be enrolled under the CPS.
However, under Nigeria’s federal structure, state governments are required to domesticate the scheme by enacting enabling laws and putting relevant administrative structures in place.
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As of 31 December 2024, only 11 states—Lagos, the FCT, Osun, Kaduna, Ekiti, Edo, Ondo, Delta, Benue, Anambra, and Jigawa—have fully implemented the CPS.
These states have set the benchmark for effective pension management, consistently remitting both employer and employee contributions and ensuring that retirees receive their benefits without delay. Jigawa State, although operating under a hybrid Contributory Defined Benefits Scheme (CDBS), was included among the commendable performers for its structured remittance.
By contrast, PenCom identified several states—including Abia, Adamawa, Bauchi, Bayelsa, Ebonyi, Enugu, Gombe, Imo, Kano, Katsina, Kebbi, Kogi, Nasarawa, Niger, Ogun, Oyo, Rivers, Sokoto, Taraba, and Zamfara—that have passed laws to adopt the CPS but are yet to make meaningful progress in implementation.
Six other states—Akwa Ibom, Borno, Kwara, Plateau, Cross River, and Yobe—have not commenced any aspect of the scheme.
“It is imperative that States adopt the CPS to avoid the accumulation of pension liabilities and ensure that public servants receive their retirement benefits promptly. The CPS ensures that funds are available at the point of retirement to pay benefits, thereby eliminating the challenges of the Defined Benefits Scheme (DBS), where retirees wait for months or years before receiving their entitlements.”
PenCom warned that reliance on the old Defined Benefits Scheme (DBS)—which has been largely unsustainable—continues to generate unfunded pension liabilities across many states.
In contrast, the CPS provides a structured, transparent, and forward-looking approach that ensures funds are available at the point of retirement, thereby guaranteeing timely benefit payments.
To assist states in transitioning, PenCom developed a Model State Pension Law and offers ongoing technical support.
Full implementation, however, requires more than legislation. States must establish a Pension Bureau, register employees with Pension Fund Administrators (PFAs), begin monthly remittances, carry out actuarial valuations, fund accrued pension rights, open a Retirement Benefits Bond Redemption Fund Account with the Central Bank or PFAs, and provide group life insurance for workers.
“The Commission reiterates its commitment to the effective regulation and supervision of the pension industry to ensure that retirement benefits are paid as and when due.”
While PenCom reaffirmed its commitment to working with state governments through guidance and engagement, it stressed that the responsibility for decisive action rests with the political leadership in each state.
Without reform, states risk not only entrenching intergenerational debt but also undermining trust in the public pension system.
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