Challenges of Pension Administration in Nigeria

There are expectations from the Nigerian government by pensioners in Nigeria, the expectations is all about effective implementation of an existing pension regulations in Nigeria.

Such expectations call for the need of having a standard of living, that is sustainable in retirement, as well as, paying their entitlements and benefits as at when due.

Be that as it may however, there are various pension regimes being operated in the country, and these various pension regimes operated in Nigeria include, Contributory Pension Scheme, as well as, Defined Benefit.

Both gave rise to different challenges that undermined the strength of major stakeholders in the pension industry in meeting expectations of pensioners in Nigeria.

Don’t Miss: 4 Best Investment Plans for Retirement

Challenges of Pension Administration in Nigeria

I will be trying as much as possible to explain some of the challenges that undermined effective administration of pension in Nigeria in this article.

However, it will interest you to know that, these challenges emanated from many areas of pension administration, and these include among others, the Transitional Pension Management, and the Guaranteed Minimum Pension, and the Additional Voluntary Contributions, and the Pension Protection Fund, as well as, Investment Guidelines, plus Public Education/Enlightenment.

Transitional Pension Management


Challenges that have been faced in the administration of pension in Nigeria, which have beleaguered pensioners in Nigeria from Pay As You Go PAYG, and Defined Beneft Scheme DBS include,

* Delayed of pension entitlements and refusal of payment of pension entitlements, as well as, non payment of pension entitlements. Sometimes, other challenge has to do with pension funds misappropriation.

* Poor standard of living, occassined by poverty among pensioners in Nigeria. This is due to increases in pension that are not in accordance with salary inflation and/or lack of pension entitlements increase whatsoever.

* Regular Nigeria’s pensioners papers verification by the pension administrators, for example, the Pension Transitional Arrangements Directorate. This frequent exercise has led to Nigeria’s pensioners dying while undergoing this rigorous verification exercises.

* Lack of effective enforcement of the existing pension regulations has been one of the challenges facing pension administrators in Nigeria. For example, CPS has been in existence for about ten years now, yet government has find it difficult to enact and enforce the pension regulations with a view to establish CPS, which to my mind, is a sign that there is deficiency on the part of pension administrators in Nigeria.

In fact, the idea to evaluate the former Defined Benefit scheme, which of course, was necessary for the implementation of the current CPS was abandoned by state governments within the federation, and they have not done anything about this, even for fact that, some state governments have established already their CPS.

Guaranteed Minimum Pension


Another challenge of pension administration in Nigeria emanated from the guaranteed minimum pension. This is specified regularly, that is, from time to time by pension administrators. It is one of the provision used for the protection of every retiree, who does not contributes enough funds for the purpose of having a good standard of living after retirement.

However, this income, under this administration can be used as support from the government, and it can served as pensioners’ safety net. Nevertheless, procedures that will lead to the implementation of the guaranteed minimum pension are yet to be concluded by the pension administrators, in spite of the fact that, the guaranteed minimum pension has existed for about ten years now.

The reason is obvious, some said that, what causes the delay is complexities in computation, which could helped in determining the guaranteed minimum pension. More so, the method used may at long run not considered necessary and important.

Additional Voluntary Contributions

* Challenges:

Under this pension administration in Nigeria, there is inadequacy in terms of evaluating individual DC member plan, that is, projection of individual pension benefit that is likely to accrue at retirement by PFAs, and of course, with a clear cut goal that will help in measuring retirement income that would be sustainable.

Metrics such as,  replacement ratio were used, and it represents a good estimate that portrayed a better standard of living after  retirement, there after, individual could be allowed to make his AVC.

The idea of replacement ratio in essence, do make provision for effective linkages with the accumulation, as well as, de-accumulation phrases of a DC plan life circle of members.

Apart from benefit gotten from tax, there is no other incentive that motivate pensioners to save  more money towards their retirement, most importantly, particularly, in the event, where the guaranteed minimum pension is about to be financed by the government.

As a result, there are little or no RSA balances for a good number of retirees, pending the time, the guaranteed minimum pension would be implemented. That is why there is this sense of disenchantment with the little pension benefit received monthly by pensioners, which are being paid under the current CPS in relations to such a huge amount of money gains from returns received from investment and dividends accruing to the Pension Fund Administrator (PFAs) currently.

The Nigeria’s pensioners indeed expect so much from the pension administrators, and from such expectations, which means that, every gain or return made from investment should be made available to those, who contributed the money, I mean, the employees, since the money belonged to them, with the exception of the other minimal fees and minimal charges expected for the pension administrators.

Moreso, lack of  reviewing these fees and other charges structure, as well as, the stipulated charges by pension administrators, which of course represented the maximum fee that are charged by the pension operators and sometimes, the non-disclosure of some charges that are not visible, including interests, as well as, commissions that accrued to assets, I mean, pension assets have also remained one of the causes of Nigeria’s pensioners dissatisfaction.

Read Also: Retirement Age in Nigeria for Various Institutions and Professions

* Conclusion

Having discussed the above challenges of the pension administration in Nigeria, like I mentioned earlier in this article, when I began, there are various pension regimes being operated in the country, and these various pension regimes operated in Nigeria include, Contributory Pension Scheme, as well as, Defined Benefit.

Both gave rise to different challenges that undermined the strength of major stakeholders in the pension industry in meeting expectations of pensioners in Nigeria.

🤑 Start making money from home today!

👉 Get correct FREE TIPS and Guides on how to make money from home today. Click here to start



👍Showcase your business here!

With over 1M unique users per month across all channels, we have a large audience for you to showcase your products and services. Simply get in touch via 👉


🤑 Make Money now!

👉 Make money writing for us. Apply for Freelance writing jobs in Nigeria.

👉 Make Money as InfoGuideNigeria Advertising Agents, read more here


This post can be helpful to somebody else, please share it on Facebook, Whatsapp, Telegram and Twitter. There are buttons below for this (easy to use too)!

Copyright Warning!

Contents on this website may not be republished, reproduced, redistributed either in whole or in part without due permission or acknowledgment.
Proper acknowledgment includes, but not limited to (a) LINK BACK TO THE ARTICLE in the case of re-publication on online media, (b) Proper referencing in the case of usage in research, magazine, brochure, or academic purposes,.
All contents are protected by the Digital Millennium Copyright Act 1996 (DMCA).
We publish all contents with good intentions. If you own this content & believe your copyright was violated or infringed, please contact us at [] to file a complaint and we will take necessary actions immediately.

Joseph Athanasius

Joseph Athanasius is a Content Developer at InfoGuide Nigeria is a team of Resource Persons and Consultants led by Ifiokobong Ibanga. Page maintained by Ifiokobong Ibanga. If you need a personal assistance on this topic, kindly contact us.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button