The implementation of pension reforms across Nigerian states suffered a significant setback in the fourth quarter of 2025 as political calculations ahead of the 2027 general elections increasingly overshadowed governance priorities.
Latest data released by the National Pension Commission (PenCom) shows that efforts to expand the Contributory Pension Scheme (CPS) at the subnational level recorded no measurable progress during the quarter, despite sustained engagement and consultations with state governments.
The development highlights a growing disconnect between pension reform commitments and actual implementation, as many state governments appear to be diverting attention and resources toward political realignments, succession battles, and election preparations.
According to PenCom’s fourth quarter 2025 industry report, only eight out of the 36 states and the Federal Capital Territory are currently fully compliant with the CPS framework established under the Pension Reform Act.
The figure remained unchanged throughout the quarter, indicating a complete halt in the momentum needed to deepen pension coverage across the country.
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Omolola Oloworaran, director-general of PenCom, addressing state heads of service at a consultative session recently, said civil servants’ retirement future hangs in the balance, not because there is no law, but because the law has not been activated.
Oloworaran said pension reform is “not optional”, insisting it is “a fiscal imperative, a statutory obligation, and a constitutional duty” backed by Section 210 of the 1999 constitution.
“The challenge is no longer the enactment of laws. The challenge is the discipline of execution, regular remittance of contributions, funding of accrued rights, and establishment of functional institutions,” Oloworaran said.
Industry analysts say the stagnation comes at a critical period when Nigeria’s pension industry is experiencing unprecedented growth, with pension assets crossing the N30 trillion mark and retirement savings becoming one of the most important sources of long-term domestic capital.
While the private sector continues to drive pension growth through improved compliance and expanding enrollment, many state governments have yet to embrace reforms designed to guarantee sustainable retirement benefits for public sector workers.
The report reveals that 17 states have already enacted pension reform laws but have failed to proceed to actual implementation. This means that while the legal framework exists, workers in those states remain outside the full protection of the CPS.
PenCom described these states as the most critical targets for future compliance efforts if the future of retirement security for millions of workers is to be secured.
“The law exists. What is missing is operational follow-through,” the commission noted, stressing that the challenge is no longer legislative but administrative and political.
The commission believes that bilateral engagements, supported by the Pension Contribution Remittance System (PCRS) and the planned Subnational CPS Adoption Index, could help convert dormant legislation into active pension coverage.
However, observers warn that achieving such progress may become increasingly difficult as political activities intensify nationwide.
Already, governors across many states are becoming deeply involved in succession planning, party negotiations, coalition-building, and strategic positioning ahead of 2027. These activities have begun to dominate state agendas, often at the expense of reforms requiring long-term commitment and financial discipline.
Pension experts argue that the delay in CPS implementation reflects a broader challenge facing subnational governments, balancing immediate political interests with long-term social obligations.
The CPS requires employers to make regular pension contributions, establish transparent remittance mechanisms, and address accumulated pension liabilities. For states grappling with revenue pressures, implementing these obligations often demands difficult fiscal decisions that may be politically unpopular.
This has left many state workers vulnerable to uncertainties surrounding retirement benefits, particularly in states that continue to rely on underfunded Defined Benefits Schemes.
Takor, a lawyer and executive director of the Centre for Pension Right Advocacy, said widespread noncompliance with the Pension Reform Act 2014 requires urgent action from civil society and organised labour, including the Nigeria Labour Congress (NLC), Trade Union Congress (TUC) and allied industrial unions.
He urged labour groups to mobilise their members to defend workers’ pension rights and resist policies and practices that undermine the welfare of workers and their families in both the public and private sectors.
The report identified Kaduna State as one of the few states making visible progress in addressing pension liabilities. During a courtesy visit to PenCom on December 19, 2025, Governor Uba Sani reported that the state had already settled about N11 billion in outstanding pension obligations and projected that the remaining N14 billion liability would be cleared within two years.
The commission also highlighted the State Consultative Forum held in Edo State between November 19 and 20, 2025, which attracted 91 participants from state and local government institutions. The forum focused on strengthening pension administration and improving compliance across subnational governments.
Despite these engagements, the broader national picture remains largely unchanged.
A notable concern remains Kano State, which, although it has made progress in pension legislation, continues to operate outside the regulatory framework prescribed by the Pension Reform Act. According to PenCom, pension funds in the state are still being held in commercial banks instead of being managed by licensed Pension Fund Administrators (PFAs), contrary to established regulatory requirements.
The commission indicated that Kano would require dedicated regulatory intervention to ensure that pension assets are transferred into the regulated pension ecosystem.
Read also: Pension funds add N1.42trn in record April surge
Meanwhile, Jigawa State remains an exception, operating a fully implemented Contributory Defined Benefits Scheme that aligns with pension reform objectives.
PenCom had planned to convene a States Compliance Roundtable in the first quarter of 2026 to accelerate CPS adoption and improve pension contribution remittances. Industry stakeholders believe the success of such initiatives will depend largely on the willingness of governors and state assemblies to place pension reform higher on their governance agenda.
For many pension operators, the stagnation in state-level compliance is particularly worrying given the strategic role pension assets now play in national economic development. With pension funds increasingly financing infrastructure projects, housing initiatives, and capital market investments, broader state participation could significantly deepen financial inclusion and strengthen retirement protection for public sector workers.
As the countdown to the 2027 elections gathers momentum, the key question remains whether state governments will prioritise long-term pension security or continue to place political considerations ahead of reforms that directly affect the welfare of current and future retirees.
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