The implementation of pension reforms across Nigerian states suffered a significant setback in the fourth quarter of 2025 as political calculations ahead of the 2027 general elections increasingly overshadow governance priorities.

Latest data from the National Pension Commission (PenCom) shows that efforts to expand the Contributory Pension Scheme (CPS) at the subnational level recorded no measurable progress during the quarter, despite ongoing engagement with state governments.

The development highlights a widening gap between pension reform commitments and actual implementation, as many states redirect attention toward political realignments, succession battles, and election preparations.

Only 8 States Fully Compliant With CPS

According to PenCom’s Q4 2025 industry report, only eight of Nigeria’s 36 states and the Federal Capital Territory are fully compliant with the Contributory Pension Scheme framework established under the Pension Reform Act.

This figure remained unchanged throughout the quarter, indicating a complete halt in momentum for expanding pension coverage across the country.

Industry observers say this stagnation comes at a critical time, as Nigeria’s pension assets have surpassed N30 trillion, making the sector one of the country’s most important sources of long-term domestic capital.

PenCom Raises Concern Over Implementation Gap

PenCom Director-General, Omolola Oloworaran, told state heads of service that workers’ retirement security is at risk not because of a lack of laws, but due to weak implementation.

She described pension reform as a legal and constitutional obligation, citing Section 210 of the 1999 Constitution.

“The challenge is no longer the enactment of laws. The challenge is the discipline of execution, regular remittance of contributions, funding of accrued rights, and establishment of functional institutions,” she said.

17 States Stuck in “Legislation Without Action”

The report shows that 17 states have enacted pension reform laws but have failed to fully implement the CPS.

This means that while legal frameworks exist, many public sector workers in these states remain outside the protection of a fully functional contributory pension system.

PenCom described these states as key priorities for future compliance efforts.

“The law exists. What is missing is operational follow-through,” the commission noted.

Politics Slowing Reform Momentum

Observers warn that increasing political activity ahead of the 2027 elections is slowing reform momentum across states.

Governors are increasingly focused on succession planning, coalition building, and party negotiations—activities that are now dominating state policy agendas.

Pension experts argue that this shift reflects a broader tension between short-term political interests and long-term governance obligations.

The Contributory Pension Scheme requires steady employer contributions, transparent remittance systems, and settlement of accrued liabilities—steps that demand fiscal discipline often avoided for political reasons.

Workers Still Exposed to Pension Uncertainty

The delay in implementation has left many state workers vulnerable, especially in states still operating under the outdated Defined Benefits Scheme.

Takor, a lawyer and executive director of the Centre for Pension Right Advocacy, called for stronger action from civil society and labour unions, including the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC).

He urged them to mobilise workers in defence of pension rights and resist practices that undermine retirement security.

States With Progress and Exceptions

Despite widespread stagnation, a few states have made notable progress.

Kaduna State has reportedly settled about N11 billion in outstanding pension obligations, with plans to clear the remaining N14 billion within two years, according to Governor Uba Sani.

Edo State also hosted a State Consultative Forum aimed at strengthening pension administration and improving compliance.

However, overall national progress remains limited.

Kano Faces Regulatory Challenges

PenCom raised concerns about Kano State, which, despite progress in legislation, still operates outside the regulatory framework.

Pension funds in the state are reportedly held in commercial banks rather than being managed by licensed Pension Fund Administrators (PFAs), contrary to regulatory requirements.

The commission says Kano will require targeted intervention to fully integrate into the national pension system.

Jigawa Remains a Model

Jigawa State remains one of the few states fully aligned with pension reform objectives, operating a contributory defined benefits structure that meets CPS standards.

Outlook for 2026 and Beyond

PenCom is expected to convene a States Compliance Roundtable in early 2026 to accelerate CPS adoption and improve remittance systems.

However, stakeholders say success will depend on political will at the state level, especially as election activities intensify.

With pension funds increasingly used to finance infrastructure and capital market investments, broader CPS adoption could strengthen both retirement security and Nigeria’s long-term financial stability.

As 2027 approaches, the key question remains whether state governments will prioritise pension reform or continue to allow political considerations to delay long-term social protection reforms.

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The National Pension Commission (PenCom) is set to roll out a revised investment regulation aimed at expanding pension fund opportunities in alternative assets and boosting real returns for contributors under the Contributory Pension Scheme (CPS).

Director-General Ms. Omolola Oloworaran disclosed this during a visit to Trade Union Congress (TUC) President, Comrade Festus Osifo, in Abuja.

“This initiative is part of ongoing reforms to address the erosion of value in pension savings and mitigate the impact of inflation on pension assets,” Oloworaran said.

She added that PenCom is collaborating with the Central Bank of Nigeria (CBN) and the Ministry of Finance to create frameworks that allow pension investments in naira but generate returns in dollars, protecting retirement funds from currency risks.

Ololoworaran also revealed that a minimum pension will soon be introduced for all retirees under the CPS, following President Bola Tinubu’s approval of a ₦758 billion bond to finance the Pension Protection Fund (PPF).

The PenCom boss urged the TUC to support stricter enforcement of the Pension Reform Act (PRA) 2014, which mandates employers to remit workers’ contributions promptly.

TUC President Osifo praised PenCom’s professionalism and pledged the union’s support. He also called for “a review of the PRA to introduce more flexibility in pension fund investments, ensuring workers’ savings are better shielded from inflation and exchange rate pressures.”

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