By Anthony Otaru, Abuja
Leading economists have warned that Nigeria’s Contributory Pension Scheme (CPS), despite recording substantial financial growth, risks falling short of its full economic potential unless coverage is significantly expanded beyond its current limited reach within the workforce.
The analysts argued that, with only about 7–10 per cent of Nigeria’s working population actively covered, the pension system remains largely underdeveloped relative to the country’s vast private and informal sectors—two critical segments capable of unlocking broader national savings, investment capital, and sustainable economic growth.
Their concerns come even as the National Pension Commission (PenCom) continues to post impressive financial milestones. As of February 2026, Nigeria’s pension assets stood at N29.43 trillion, reflecting an estimated 85-fold increase since the scheme’s establishment and underscoring its status as one of the country’s most successful financial sector reforms.
However, economists insist that asset growth alone is insufficient if participation remains narrow.
An international development consultant and development economist, Prof Ken Ife, said the next phase of pension reform must focus on transforming the scheme from a regulatory success into a strategic economic driver.
“The pension scheme has achieved remarkable success over time, but its real economic power lies in broadening participation, especially within the private and informal sectors,” Ife said.
He noted that wider pension inclusion would deepen domestic savings pools, strengthen long-term capital availability, and provide critical funding for infrastructure, manufacturing, and other productive sectors of the economy.
According to him, overreliance on government treasury instruments limits the transformative potential of pension assets.
“There is an urgent need to diversify pension fund investments away from excessive concentration in government securities into infrastructure, manufacturing, and real-sector investments, while also hedging against inflation, exchange rate volatility, and negative real interest rates,” he explained.
Ife further called for stricter enforcement mechanisms, particularly within the public sector, where compliance inconsistencies persist despite institutional frameworks.
“PenCom can strengthen enforcement by integrating pension compliance directly with the Integrated Personnel Payroll System (IPPS) and private-sector HR systems to close existing gaps,” he stated.
He also described PenCom’s restructuring of the Micro Pension Scheme into the Personal Pension Plan (PPP) as a potentially game-changing reform designed to attract informal workers such as artisans, traders, and freelancers.
“The rebranding represents a major shift toward pension liberalisation by allowing informal workers greater flexibility, including contingency withdrawals before retirement, while fintech integration with platforms like Moniepoint and Opay can align pension savings with the daily cash flow realities of millions,” he said.
He stressed that this innovation could dramatically increase pension participation if effectively implemented.
“It is a strong starting point, but Nigeria still has a long way to go in ensuring the private and informal sectors are fully integrated into the pension system,” Ife added.
Similarly, a former Director-General of the West African Institute for Financial and Economic Management, Prof Akpan Ekpo, said the pension scheme’s achievements should not overshadow the pressing need for deeper national inclusion.
“Yes, the scheme has done well over time, but broader private-sector penetration is essential. Expanding pension participation will improve social security and significantly reduce poverty,” Ekpo said.
He observed that the scheme’s current base of over 11.13 million Retirement Savings Account holders demonstrates progress, but remains small relative to Nigeria’s total labour force.
Ekpo also commended PenCom’s policy reforms that have improved the efficiency of retirement payments, noting that prompt pension access has strengthened trust in the system.
Still, both economists agreed that unless pension reforms aggressively target compliance, inclusion, and productive investment diversification, Nigeria may miss a critical opportunity to transform its pension assets into a powerful engine for economic development.
