PenCom Urges Full CPS Implementation Across States for Pension Security
By Patience Ikpeme
The National Pension Commission (PenCom) has called for the complete implementation of the Contributory Pension Scheme (CPS) by all states and local governments in Nigeria, aiming to create a secure pension system for the nation.
PenCom identified six states that have yet to commence the CPS: Akwa Ibom, Borno, Kwara, Plateau, Cross River, and Yobe.
The commission strongly advised these states to expedite the enactment of their CPS laws and proceed with full implementation.
Additionally, several states have passed laws to adopt the CPS but have not made significant progress in implementing it. These states include Abia, Adamawa, Bauchi, Bayelsa, Ebonyi, Enugu, Gombe, Imo, Kano, Katsina, Kebbi, Kogi, Nasarawa, Niger, Ogun, Oyo, Rivers, Sokoto, Taraba, and Zamfara.
PenCom urged these states to increase their efforts toward full CPS implementation, ensuring timely remittance of employer and employee pension contributions.
In a statement released on Wednesday, PenCom commended the following states for their effective CPS implementation as of December 31, 2024: Lagos, Federal Capital Territory (FCT), Osun, Kaduna, Ekiti, Edo, Ondo, Delta, Benue, Anambra, and Jigawa.
These states PenCom said have established a standard for sustainable pension administration by ensuring prompt payment of retirees’ entitlements and consistent remittance of pension contributions. Jigawa State remits contributions under the Contributory Defined Benefits Scheme (CDBS).
The Pension Reform Act (PRA) 2014 mandates the CPS for all public sector employees across Nigeria, including the FCT, states, and local governments, as well as the private sector. However, state governments must domesticate the CPS by enacting relevant pension laws, as per the 1999 Constitution.
In August 2006, the National Council of States adopted the CPS for all states and local governments. PenCom developed a Model State Pension Law to facilitate this process.
PenCom lamented that many states have not fully implemented the CPS. Full implementation requires enacting a CPS law, establishing a Pension Bureau, registering employees with Pension Fund Administrators (PFAs), and starting pension contribution remittances.
States also need to conduct Actuarial Valuation, fund Accrued Pension Rights, procure Group Life Insurance for employees, and open and fund a Retirement Benefits Bond Redemption Fund Account with the Central Bank of Nigeria (CBN) or a PFA.
The transition from the Defined Benefits Scheme (DBS) to the CPS is a necessary step for state and local governments. The CPS aims to ensure timely payment of retirement benefits and provide a sustainable pension system.
PenCom pointed out that the CPS provides a long-term solution to pension liabilities faced by many states. Delaying its adoption will increase financial burdens for future generations, but implementing the CPS now will help states manage pension obligations and ensure financial stability.
PenCom said it remains committed to promoting nationwide compliance with the CPS. The commission promised to continue engaging with non-compliant states, providing guidance and support. It believes that a pension-secure Nigeria is achievable with the full commitment of all states to the CPS.
