PenCom Urges Lagos to Adopt Automatic Pension Deduction System
By Patience Ikpeme
The National Pension Commission (PenCom) has advised the Lagos State Government to institute an Irrevocable Standing Payment Order (ISPO) for the automatic deduction and remittance of pension contributions directly from the state’s Federation Account Allocation Committee (FAAC) allocations.
This recommendation aims to safeguard pension remittances from potential administrative delays.
The Director General of PenCom, Ms. Omolola Oloworaran, presented this request during a formal visit to Governor Babajide Sanwo-Olu at the Lagos State Government House on Tuesday, May 7, 2025.
The purpose of the visit was to present the findings of PenCom’s 2024 routine inspection of the Lagos State Pension Commission (LASPEC) and to express gratitude to the Governor for confirming his attendance as a Special Guest at the Pension Industry Leadership Retreat commencing today, May 8, 2025.
Furthermore, the Director General suggested that unremitted contributions currently held in commercial banks’ escrow accounts be moved into Transitional Contribution Fund (TCF) accounts managed by Pension Fund Administrators (PFAs).
This move, according to PenCom, would optimize investment returns on these funds.
Ms. Oloworaran also appealed to the Governor to consider the implementation of a Minimum Pension Guarantee (MPG), mirroring the existing system within the mandatory Contributory Pension Scheme (CPS).
She informed the Governor that the Federal Government has commenced its MPG contributions and included it in the recent approval for the issuance of a N758 billion bond intended to clear pension liabilities.
While acknowledging the State’s provision of a N600 million bailout for the outstanding accrued rights of Lagos State University of Education (LASUED) retirees, the PenCom DG requested further intervention to address unpaid benefits from 2023 and 2024.
She also called on Governor Sanwo-Olu to extend the periodic pension increases currently received by retirees under the Defined Benefit Scheme (DBS) to those participating in the Contributory Pension Scheme (CPS), with the goal of increasing their monthly pension payouts.
The PenCom DG drew attention to the fact that presently, only DBS retirees in Lagos State benefit from pension increases, excluding their counterparts within the CPS. She argued for the prioritisation of retirees under the CPS, given the contributory nature of the scheme.
Ms. Oloworaran proposed a collaboration between PenCom and Lagos State to make the Pension Clearance Certificate (PCC) a mandatory requirement for companies seeking contracts and services from the Lagos State Government, similar to the practice at the federal level.
The PenCom DG commended Lagos State for its position as a leading example in the Federation for its successful implementation of the CPS. She cited significant achievements, including the consistent deduction and remittance of employee contributions to their Retirement Savings Accounts (RSAs), the complete settlement of all backlogs of accrued pension rights, the existence of a valid Group Life Insurance Policy for a majority of public service employees, and the deployment of advanced ICT systems to improve pension administration within Lagos State.
In his response, Governor Sanwo-Olu expressed optimism regarding the sustainability of reforms by future administrations. However, he suggested that an ISPO might not be necessary at the present time.
He restated the State’s dedication to pension reforms and praised the cooperative relationship with PenCom under its current leadership.
The Governor voiced his support for implementing pension increases for CPS retirees.
He conveyed the significance of workers’ welfare within his administration’s agenda.
The Governor also urged PenCom to support Lagos State’s developmental initiatives by encouraging pension fund investments in government-issued bonds.
