Unremitted pensions: The silent threat to workers’ retirement security

For millions of Nigerian workers enrolled under the Contributory Pension Scheme (CPS), monthly pension deductions are expected to provide financial security after retirement. However, a growing challenge within the system is threatening that promise: The persistent failure of some employers to remit pension contributions deducted from employees’ salaries.

Despite nearly two decades of pension reform and significant growth in pension assets, non-remittance of pension contributions remains one of the biggest compliance concerns facing Nigeria’s pension industry. The practice cuts across both public and private sector organisations, leaving many workers vulnerable to financial hardship in retirement.

Industry stakeholders say the issue has become increasingly urgent as pension assets hits over N30.9 trillion in March 2026, making compliance enforcement a critical component of protecting contributors’ funds and sustaining confidence in the pension system.

A Growing Compliance Challenge

Under the Pension Reform Act, employers are required to deduct pension contributions from employees’ salaries and remit them promptly to their respective Pension Fund Administrators (PFAs). Failure to do so constitutes a violation of the law and undermines the objectives of the CPS. Yet many employers continue to default, creating a situation where workers believe their retirement savings are growing, only to discover years later that contributions were never credited to their Retirement Savings Accounts (RSAs).

The consequences can be severe. Workers may lose years of pension accumulation, investment returns, and retirement benefits, while pension administrators face difficulties maintaining accurate records and ensuring seamless benefit payments upon retirement.

Labour leaders have repeatedly described the practice as a form of economic injustice, arguing that pension contributions are deferred earnings belonging to workers and should never be withheld by employers.

Why Pension Remittance Matters

Pension remittance is more than a regulatory requirement; it is a fundamental pillar of retirement planning. The CPS was introduced to replace the largely unsustainable Defined Benefits System and create a transparent framework where workers save towards their retirement throughout their careers. The success of the scheme depends heavily on consistent contributions from both employers and employees.

When remittances are delayed or withheld, workers lose not only their principal contributions but also the investment income that would have accrued over time. For employees nearing retirement, such gaps can significantly reduce retirement benefits and financial stability.

Experts warn that widespread non-compliance can also erode trust in the pension system, discouraging participation and weakening one of Nigeria’s most important long-term savings mechanisms.

PenCom’s Intensified Enforcement Drive

Recognising the threat posed by non-remittance, the National Pension Commission (PenCom) has strengthened its compliance and enforcement framework in recent years.

According to PenCom, the regulator’s focus has increasingly shifted towards the private sector, where compliance challenges remain more prevalent.

One of the major enforcement tools introduced by PenCom is the pension clearance certificate requirement. Companies seeking contracts, business opportunities, or engagements with the Federal Government must now provide evidence that pension contributions have been fully remitted. The compliance requirement has expanded beyond direct employers to include contractors, vendors, service providers, and organisations seeking access to pension-related investments. This broader approach is designed to create a culture of accountability throughout the business ecosystem, ensuring that pension compliance becomes a prerequisite for commercial participation.

The Role of Labour Unions

Labour unions are also emerging as key partners in the enforcement process. Workers’ representatives argue that employees are often unaware that their pension deductions have not been remitted until they attempt to access their retirement savings. As a result, unions are increasingly engaging in awareness campaigns, workplace monitoring, and collaboration with regulators to identify defaulting employers. The involvement of organised labour provides an additional layer of oversight, particularly in sectors where regulatory monitoring may be limited.

By encouraging workers to regularly review their RSA statements and report discrepancies, labour groups hope to improve transparency and reduce instances of pension abuse.

Protecting Retirement Savings in a Growing Pension Industry

Nigeria’s pension industry has recorded remarkable growth since the introduction of the CPS in 2004. Pension assets have expanded from a modest base to over N30 trillion at the end of April 2026, making the sector one of the largest pools of long-term capital in the country.

The growth has supported investments in government securities, corporate bonds, infrastructure financing, and other sectors of the economy. However, sustaining this progress depends on ensuring that every eligible worker receives the full benefits of pension participation.

As regulators, labour unions, and industry stakeholders intensify compliance efforts, experts believe greater enforcement, stronger sanctions, and increased worker awareness will be crucial to closing existing gaps.

Ultimately, the long-term success of Nigeria’s pension system will depend not only on asset growth but also on ensuring that every naira deducted from workers’ salaries reaches its intended destination, securing dignity and financial stability in retirement.