PenCom urges governors to show stronger political will on workers’ pensions

The National Pension Commission (PenCom) has called on state governors to demonstrate stronger political will in implementing the Contributory Pension Scheme (CPS), warning that delays in pension reforms could expose millions of public sector workers to financial hardship in retirement and saddle states with mounting pension liabilities.

Speaking at the first 2026 Consultative Forum for States, the Federal Capital Territory and Licensed Pension Fund Operators in Lagos, Omolola Oloworaran, director-general of PenCom, said only eight states have fully implemented the CPS despite its proven benefits in securing workers’ retirement savings and improving fiscal sustainability.

“Governors need to demonstrate stronger political will by prioritising the welfare of their workers, not only during their years of service, but also after retirement. They must look beyond immediate needs and ensure that workers have financial security when they retire,” Oloworaran said.

She cautioned states against retaining workers’ pension contributions in government-controlled accounts, describing the practice as a major threat to the integrity of the pension system.

“You cannot deduct pension contributions from employees and pay them into a state account. That should never happen because another governor may assume office without understanding the purpose of the funds, and the money could be diverted to other uses. That would ultimately increase pension liabilities and undermine the integrity of the pension system,” she said.

According to Oloworaran, while state governments have the constitutional authority to enact their own pension laws, implementation must align with the principles of the CPS, particularly the protection of contributors’ retirement savings through licensed Pension Fund Administrators.

She stressed that pension reform is no longer a policy choice but a leadership responsibility, noting that countries and sub-national governments that delayed reforms are now grappling with unsustainable pension obligations and growing fiscal pressures.

“The question before every state is no longer whether pension reform is necessary. The real question is whether we have the courage and foresight to build a pension system that will protect workers 20, 30 or even 50 years from now. That is a test of leadership,” she said.

To strengthen implementation, Oloworaran said PenCom has introduced the Pension Contribution Remittance System to improve transparency and efficiency in pension remittances, as well as the Three-Dimensional Pension Model to help states clear legacy pension liabilities while transitioning sustainably to the CPS.

She, however, maintained that regulatory frameworks alone would not guarantee success.

“No framework, regulation or model, no matter how well designed, can substitute for political will. Real reform begins where legislation ends, with implementation,” she said, urging states yet to fully adopt the CPS to accelerate action.

Also speaking, Babalola Obilana, director-general of the Lagos State Pension Commission, who represented the Lagos State Head of Service, Bode Agoro, said sustained collaboration among regulators, state governments and pension operators is critical to strengthening pension administration across the country.

“As one of the leading states in pension administration, Lagos believes the continued success and sustainability of the Contributory Pension Scheme depend on strong collaboration among all stakeholders,” Obilana said.

He noted that consultative forums provide an opportunity for policymakers and industry operators to exchange ideas, address emerging challenges and develop practical solutions that will improve pension administration nationwide.

Obilana added that as the pension landscape evolves, governments must embrace technology, adopt global best practices and strengthen institutional partnerships to build a pension system that is transparent, efficient and responsive to the needs of workers.

He reaffirmed Lagos State’s commitment to supporting initiatives that promote good governance, regulatory compliance, service excellence and the long-term sustainability of pension administration.