Your pension in Nigeria: the Contributory Pension Scheme and RSAs
Most Nigerian employees save for retirement in a Retirement Savings Account. How contributions work, how to check them and when you can access the money.
Nigeria's Contributory Pension Scheme (CPS), regulated by the National Pension Commission (PenCom), is how most formal-sector employees save for retirement. Every worker covered has a personal Retirement Savings Account (RSA), managed by a Pension Fund Administrator (PFA) of their choice. The money belongs to you, and it grows through investment until you retire. This guide explains how the Contributory Pension Scheme works, how much is contributed, how to check your RSA, and when you can access your money.
Who contributes and how much
Under the Pension Reform Act 2014, the minimum contribution is 8% of your monthly emoluments from you and 10% from your employer, where emoluments mean basic salary plus housing and transport allowances. Employers can agree to pay the whole contribution, and you can make voluntary contributions on top. The scheme applies to public-sector workers and to private employers with three or more employees, and self-employed people and those in the informal sector can join the Micro Pension Plan.
For example, if your basic salary, housing and transport allowances add up to ₦300,000 a month, you contribute ₦24,000 and your employer ₦30,000, so ₦54,000 goes into your RSA each month, or ₦648,000 a year before investment returns.
Your pension contribution is deducted before income tax is calculated, which lowers your tax. See the effect on your pay with our Nigeria PAYE calculator and our guide to the Nigeria Tax Act 2025.
Check your pension contributions
Your employer deducts your share and must send both contributions to your PFA promptly. Check your RSA statement regularly, through your PFA's app, website or statements, to confirm that every month's contribution has arrived. Missing remittances are easier to resolve quickly than years later. Keep your personal details, such as your phone number, bank account and next of kin, up to date.
Choosing and switching a PFA
Your PFA invests your savings in line with PenCom's rules, using multi-fund options that vary by age and risk. Younger contributors can be placed in funds with more growth assets, while those near retirement are in more conservative funds. If you are unhappy with your PFA's service or returns, you can move your RSA to another PFA once a year under the RSA transfer window. Compare returns over several years, fees, and how easy each PFA is to deal with.
When you can access your pension
You can generally draw your pension when you retire, at 50 or above, or earlier if you retire on medical grounds. At retirement you can take a lump sum, provided what remains is enough to fund a pension, and receive the rest as programmed withdrawals from your PFA or as an annuity from a life insurer. If you lose your job before 50 and do not find another within four months, you may be able to withdraw up to 25% of your balance. PenCom rules also allow you to use up to 25% of your RSA balance as an equity contribution towards a residential mortgage, subject to conditions.
Voluntary contributions
You can add voluntary contributions to your RSA to build a larger pension. Voluntary contributions are invested alongside your mandatory savings, and part can be withdrawn under PenCom's rules, though tax may apply to withdrawals made within a set period. Topping up when you receive a bonus or a pay rise is an easy way to boost your retirement income.
Your pension and inflation
Because your RSA is invested, it has a chance to grow faster than cash, which matters when inflation is high. Our guide to protecting your savings from inflation in Nigeria explains how a pension fits alongside other investments.
Frequently asked questions
How much is the pension contribution in Nigeria?
At least 8% from the employee and 10% from the employer, based on basic salary, housing and transport allowances.
Can I change my Pension Fund Administrator?
Yes, once a year under the RSA transfer window.
Can I use my RSA to buy a house?
PenCom rules allow up to 25% of your RSA balance as an equity contribution towards a residential mortgage, subject to conditions.
Sources
This article is general information, not financial advice.