Nigeria 

Nigeria operates a three-tier pension structure centered around the Contributory Pension Scheme (CPS), supported by voluntary and legacy systems. It’s regulated by the National Pension Commission (PenCom) under the Pension Reform Act of 2014

Nigeria’s Pension Scheme Structure

1. Contributory Pension Scheme (CPS) – Tier 1

This is the main mandatory pension system for employees in both the public and private sectors.

• Contributions: Minimum of 7.5% from employees and 7.5% from employers (total 15%) of monthly emoluments.

• Retirement Savings Account (RSA): Each employee opens an RSA with a Pension Fund Administrator (PFA), where contributions are deposited.

• Management: Funds are held by Pension Fund Custodians (PFCs) and invested by PFAs.

• Portability: RSAs are portable across jobs and sectors.

• Benefits: Monthly pensions or lump-sum withdrawals upon retirement, based on accumulated savings and investment returns.

2. Defined Benefit Scheme (DBS) – Legacy Tier

This scheme predates the 2004 reform and still applies to:

• Employees who had 3 years or less to retire when the CPS was introduced.

• Certain categories of public servants under constitutional provisions.

• Structure: Government pays pensions directly from budget allocations.

• Challenges: Historically plagued by underfunding and delays.

3. Voluntary & Micro Pension Schemes – Tier 2 & 3

Designed for informal sector workers, self-employed individuals, and those outside formal employment.

• Micro Pension Scheme: Allows flexible contributions from artisans, traders, freelancers, etc.

• Voluntary Contributions: RSA holders can make additional contributions beyond mandatory limits.

• Tax Benefits: Contributions may qualify for tax relief under certain conditions.

🧠 Key Features of Nigeria’s Pension System

• Fully Funded & Privately Managed: CPS funds are invested and managed by licensed PFAs.

• Third-Party Custody: Ensures transparency and reduces risk of misappropriation.

• Regulated by PenCom: The National Pension Commission oversees compliance, licensing, and reforms.

• Transfer Window: RSA holders can switch PFAs for better service or returns.

Would you like help comparing Nigeria’s structure with Ghana’s SSNIT or the UK’s three-pillar system for diaspora planning? I can also help map this into a visual guide for your FlexPlan platform.

Sources: PenCom FAQ, PwC Nigeria Pension Industry Report, PersonalFinance.ng.