Wednesday 10th December; 2025-The House of Representatives has unanimously passed a motion calling for the immediate and comprehensive review and reform of the Contributory Pension Scheme (CPS) in Nigeria, citing widespread hardships, meager pension payments, and rising poverty among the nation’s senior citizens.
The motion, sponsored by Hon. Afuape Moruf Afolabi, acknowledged that the CPS, established under the Pension Reform Act of 2004 (as amended in 2014), was intended to secure retirement benefits for Nigerian workers. However, the House expressed deep worry and disturbance that the scheme is currently failing its purpose, leaving many retirees unable to cope with increasing inflation and living costs.
Key Concerns Raised by the House:
Meager Pension Payments: The scheme is yielding pension payments so low that they are contributing to widespread poverty among senior citizens.
Restrictive Lump Sum Payout: The structure limits retirees to a lump sum payment of only 25% of their total pension savings, with the remaining 75% retained by Pension Fund Administrators (PFAs) for investment, often yielding disproportionately low returns.
Lack of Transparency and Distrust: Concerns were raised over the lack of transparency in pension fund management, which has led to significant distrust among retirees.
Equity Disparity: The House noted a significant disparity in treatment between retirees under the CPS and those under the older Defined Benefit Scheme (DBS), raising issues of fairness and equity.
Failure to Address Economic Realities: The current scheme has not adapted to address the harsh economic realities of increasing inflation and living costs faced by retirees.
Resolutions and Mandates:
To address these critical issues, the House has resolved to take the following actions:
Urge the Ministry of Labour and Employment to collaborate with all stakeholders to reform the Contributory Pension Scheme, with the explicit aim of establishing a fair, sustainable, and dignified pension system.
Urge the National Pension Commission (PENCOM) to significantly enhance oversight of Pension Fund Administrators (PFAs) by:
Imposing stricter regulations and transparency measures.
Ensuring equitable returns on investments, prioritizing the interests of retirees.
Implementing measures to provide retirees with greater control and flexibility over their pension funds.
Further Urge PENCOM to urgently address the pervasive issue of non-remittances of pension contributions by employers, imposing stricter penalties to ensure full compliance across the board.
Mandate the House Committee on Pensions to immediately investigate the inadequacies of Pension Fund Administrators and the challenges affecting Pension Fund Administration, with a view to ensuring effective coordination. The Committee is required to report its findings within four (4) weeks for further legislative action.
The House is committed to legislative action that will secure the financial well-being of all Nigerian workers in their retirement years.
