Informal sector pensions under pressure as 92% of accounts remain unfunded

Nigeria’s drive to expand pension coverage among informal sector workers is facing a sobering reality, registration growth is not translating into actual retirement savings.

Latest industry data on the Personal Pension Plan (PPP) at the end of fourth quarter 2025 shows that out of 215,412 registered Retirement Savings Accounts (RSAs) across 20 Pension Fund Administrators (PFAs), only 17,320 accounts have received any contribution. A staggering 198,092 accounts, representing about 92 percent of total registrations, remain unfunded.

The figures raise fresh concerns about the effectiveness of pension inclusion strategies and highlight the growing impact of Nigeria’s cost-of-living crisis on long-term financial planning.

The industry regulator though has sparked new strategies to turn the corner with funding package for some market women, these remains to become visible until when the first quarter 2026 figures come out.

The current data suggests that while millions of Nigerians may be willing to register for pension schemes, many are unable to make regular contributions as inflation, rising food prices, transportation costs, housing expenses and declining purchasing power continue to erode disposable incomes.

For many workers in the informal sector, despite the primary target of the scheme, daily survival has become a more urgent priority than retirement planning.

Industry analysts say the numbers reveal a disconnect between pension access and pension participation.

“The industry had measured success by the number of accounts opened rather than the number of people actively saving,” a pension analyst observed. “Registration is important, but retirement security can only be achieved through consistent contributions.”

The challenge is particularly evident in the market leadership position of AccessARM Pensions, which controls 52.53 percent of all cumulative PPP registrations, making it by far the dominant operator in the segment during the quarter under review.

Despite this impressive scale, only 1.82 percent of its registered PPP accounts had been funded as of the fourth quarter of 2025, underscoring the industry’s biggest challenge, converting registrations into active contributors.

The broader industry picture is only marginally better. Across all PFAs, the average funded ratio stands at approximately 8 percent, meaning that fewer than one in every twelve registered account holders has made any contribution.

The development raises questions on strategy and depth of pension inclusion in Nigeria. While official enrolment numbers continue to rise, actual retirement savings behaviour remains weak.

The data also reveals significant market concentration among operators.

The top five PFAs accounted for 62.11 percent of all new PPP registrations, while the two largest operators alone controlled 39.71 percent of new accounts during the review period. This concentration reflects the growing importance of distribution networks, brand recognition and digital channels in attracting informal sector participants.

However, the performance of some smaller operators suggests that quality of engagement may matter more than scale.

Fidelity Pension Managers emerged as the industry’s strongest performer in converting registrations into funded accounts. Out of 1,918 registered PPP accounts, 87 percent had received contributions, giving the company the highest funding ratio in the market.

Guarantee Trust Pension Managers followed with a 52 percent funded ratio, while FCMB Pensions achieved 30 percent and Veritas Glanvills recorded 29 percent, all significantly above the industry average.

Their performance suggests that effective customer engagement, contributor education and targeted follow-up strategies can play a critical role in encouraging actual participation.

The findings come at a time when economic pressures are reshaping household financial priorities across the country.

Nigeria’s prolonged inflationary environment has significantly weakened real incomes, particularly among self-employed workers, artisans, traders and small business owners who constitute the core target market for the Personal Pension Plan.

Many contributors who opened accounts with the intention of saving for retirement are increasingly diverting available funds to immediate consumption needs, including food, healthcare, education and transportation.

Pension experts warn that if the trend persists, the country risks creating an illusion of inclusion, where large numbers of citizens are counted as pension participants despite having no meaningful retirement savings.

The original objective of the Micro Pension Plan, launched by the National Pension Commission (PenCom), before its recent relaunch as PPP was to extend pension coverage to millions of Nigerians outside formal employment and reduce old-age poverty. While enrolment growth indicates increasing awareness, the low funding rates suggest that awareness alone is insufficient.

Industry stakeholders argue that the next phase of pension expansion must focus on contribution sustainability rather than registration targets.

This could involve stronger financial literacy campaigns, more flexible contribution structures, digital payment innovations, incentive-based savings programmes and broader economic reforms that improve household incomes.

Ultimately, the PPP data provides a revealing snapshot of the Nigerian economy itself. The fact that more than nine out of every ten registered pension account holders have not funded their accounts reflects not only challenges within the pension industry but also the harsh economic realities confronting millions of Nigerians.

As operators continue to expand pension access, the real measure of success may no longer be how many accounts are opened, but how many Nigerians can actually afford to save for retirement.