The National Pension Commission (PenCom) has mandated states and local governments to implement the Contributory Pension Scheme (CPS) for a pension-secure Nigeria. The Pension Reform Act (PRA) 2014, in Section 2(1), stipulates that the CPS applies to all public sector employees across the Federation, including the Federal Capital Territory, states, and local governments, as well as the private sector.

In a statement signed by the Commission, it noted that in line with the 1999 Constitution of the Federal Republic of Nigeria (as amended), state governments have the constitutional right to legislate on pension matters within their jurisdictions. As such, state governments are required to domesticate the CPS by enacting appropriate pension laws within their states.

“In August 2006, the National Council of States adopted the CPS for all states and local governments. To support this adoption, PenCom developed a Model State Pension Law, enabling state governments to modify it according to their unique needs. PenCom reviews draft state pension laws and guides states throughout the implementation process.

“So far, many states are yet to implement the CPS. For a state to implement the CPS in full, the state is required to enact a law on CPS, establish a Pension Bureau, register its employees with Pension Fund Administrators (PFAs) and commence remittance of pension contributions.

“The state is also required to carry out Actuarial Valuation, commence funding of Accrued Pension Rights, procure Group Life Insurance for its employees, and open and fund a Retirement Benefits Bond Redemption Fund Account with the Central Bank of Nigeria (CBN) or PFA,” the statement read.

The PenCom commended some states for their exemplary implementation of the CPS as at 31 December 2024, saying such states have set the benchmark for sustainable pension administration by ensuring that retirees receive their entitlements promptly.

The statement added that adopting the CPS now will help states avoid escalating costs and provide a more secure financial future for both retirees and taxpayers. Moreover, it added, the CPS ensures fiscal discipline by accurately determining and systematically settling pension obligations, while also making funds available at the point of retirement for the prompt payment of benefits.

The commission assured that it will continue to engage with non-compliant states, providing necessary guidance, advisory support, and technical expertise to facilitate their transition.