Retirement plan participation rate increases in Nigeria

The number of Nigerians enlisting or signing up for retirement plans in the country is on the increase, reports indicate.

According to the July edition of the Pension Asset Summary Report released by the National Pension Commission, the total number of Retirement Savings Account holders stood at 9,405,553. That is an increase of 189,765 when compared to the number of RSA holders as of December 2020. This represents a 2.01% increase or a monthly average increase of 27,000 new registrants.

Though the pension to GDP ratio in Nigeria still falls behind other developing economies, the fact that the participation rate is increasing on a month-to-month basis is something to cheer about. Unfortunately, however, the participation rate in Nigeria still lags behind those of advanced countries such as the United States, for example, where 50% of Americans participate in workplace retirement plans.

Although planning for one’s future financial wellbeing upon retirement is very important, given the current state of affairs in Nigeria’s economy, Nigerians cannot take the full blame for their dismal participation in the pensions space.

Nigerians lack the proper public financial education and encouragement required to get motivated into saving for retirement. In addition, Nigerians have so many other financial issues to grapple with, such as dwindling income insufficient to cope with the rising cost of goods and services in the country, providing for the basic necessities of their families, dealing with utility bills and several other financial obligations that have relegated the need for retirement saving to the back seat.

Needless to say, that the government should do more by way of financial education as well as coming up with tax savings or credits that could incentivize people to save towards their retirement. The news once made the rounds about how much state governors get as retirement packages. Why then has the Nigerian government not come up with laws that will help ordinary Nigerians save for their retirement?

In the US for example, workers are allowed to save up to $19,000 a year, tax free, as long as they are below 50 years and those 50 and above are allowed to save up to $24,000. In Australia, there is almost universal participation among workers in retirement plans because of a government mandate. In the Netherlands, pension laws require that workers’ pensions be converted to lifetime annuities to make sure that they do not spend all their retirement income before age 75 through 80. In Britain, the government has asked pension fund managers to keep administrative fees as low as possible to enable people save for retirement.

Agreed that admin fees being charged by pension fund managers in Nigeria is pegged at N100 per month, other incentives can also be brought in by reducing other fees as well.

Unemployment affects retirement plan participation

Unfortunately, the major reason for the low participation rate in Nigeria is unemployment. You cannot save what you do not have. Generally, pension participation is a function of income and income is dependent on employment. So, it boils down again to the government’s ability to create a conducive environment for job creation, for people to be employed in those jobs and for them to be incentivized enough to save for their retirement.

Looking at Nigeria, there are so many opportunities for the government to create jobs but it does not look like the government sees those opportunities or perhaps, those in power are either selfish or do not know what or how to do it.


With the unemployment rate as high as 35% in Nigeria and employers shamefully engaging in age discrimination in their employment process by requiring that applicants of above certain age limits should not apply for some jobs, it is becoming obvious that retirees may not be adequately taken care of by their children in old age.

As more and more Nigerians come to grips with the fact that gone are the days when retirees depend on their children for meeting their financial needs at retirement, the pension participation rate will likely keep increasing, albeit at a snail speed.

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