If you work for an organisation in Nigeria, you probably see a “pension” deduction on your payslip every month. Many employees never check where that money goes, how much is there, or when they can use it. Your Retirement Savings Account (RSA) could become one of the largest sums of money you ever own, so it is worth understanding. This guide explains Nigeria’s Contributory Pension Scheme in plain language.
What is the Contributory Pension Scheme?
The Contributory Pension Scheme (CPS) is governed by the Pension Reform Act 2014, which repealed the 2004 Act, and regulated by the National Pension Commission (PenCom). Under it, money is set aside each month by you and your employer into an account in your name, invested by a licensed Pension Fund Administrator (PFA), and paid to you at retirement (PenCom FAQ).
Key players
- You, the RSA holder: the account is yours and moves with you from job to job.
- Your employer: deducts your contribution, adds its own, and remits both to your PFA.
- Pension Fund Administrator (PFA): invests the money and manages your account.
- Pension Fund Custodian (PFC): holds the assets separately from the PFA for safety.
- PenCom: the regulator, which also approves withdrawals.
How much is contributed?
The minimum total contribution is 18% of your monthly emoluments: 8% from you and 10% from your employer (PenCom FAQ 2020). For contribution purposes, emoluments are generally your basic salary plus housing and transport allowances, not every allowance.
An employer may choose to bear the whole contribution itself, as long as the total is not less than the legal minimum. Employers with a minimum number of staff are required to participate; check PenCom guidance for the threshold that applies.
Example
| Item | Monthly (₦) |
|---|---|
| Basic + housing + transport | 200,000 |
| Your contribution (8%) | 16,000 |
| Employer contribution (10%) | 20,000 |
| Total into your RSA | 36,000 |
That is ₦432,000 a year before investment returns, from a ₦200,000 monthly BHT package.
Voluntary contributions
You can add more than the mandatory 8%. PenCom’s FAQ says employees may make additional voluntary contributions as long as their total contributions and other deductions do not exceed one-third of total monthly emoluments. Voluntary contributions can be useful for building long-term savings, and pension contributions are an eligible deduction for tax under the Nigeria Tax Act 2025. Rules on withdrawing voluntary contributions and on tax for early withdrawal apply, so ask your PFA before relying on them.
Pension and your tax
Your pension contribution is deducted before PAYE is calculated, which reduces your chargeable income. See our 2026 PAYE guide for worked examples.
When can you access your RSA?
At retirement
According to PenCom, you can access your RSA on retirement under your conditions of service or on reaching age 50, or if you are medically certified as incapacitated. At retirement, you can take a lump sum and then receive the rest through:
- Programmed withdrawal: regular monthly or quarterly payments from your PFA while the balance stays invested.
- Life annuity: you use the balance to buy an annuity from a licensed insurance company that pays you for life.
The lump sum is allowed provided what remains is enough to fund a programmed withdrawal or annuity of at least 50% of your remuneration at retirement.
If you lose your job before 50
If you are under 50, leave or lose your job, and cannot get another within four months, you may apply to withdraw up to 25% of your RSA balance (Section 7(2), PRA 2014). Stanbic IBTC Pension Managers notes this application can only be made once and that data recapture must be completed first.
For a home: equity contribution for a mortgage
PenCom’s guidelines on equity contribution for residential mortgage allow eligible RSA holders to use up to 25% of their RSA balance as the equity (down payment) for a residential mortgage. Key conditions include:
- At least 60 months of mandatory employer and employee contributions.
- At least three years left before retirement.
- A verified offer letter for the property and a mortgage from an eligible lender.
- If 25% is not enough for the required equity, you pay the difference to the lender.
How to check your RSA
- Find your RSA PIN (it starts with “PEN”) on your payslip, welcome letter or by contacting your PFA.
- Register on your PFA’s website or app.
- Check your statement: are contributions arriving every month? Do they match 18% of your BHT?
- Update your details, including next of kin, phone and email.
- Complete data recapture if your PFA asks; it is required for many benefit applications.
What if your employer is not remitting?
Unremitted pension is a known problem in some organisations. If deductions appear on your payslip but not in your RSA statement:
- Raise it politely with HR or payroll, with dates and amounts.
- Contact your PFA for confirmation.
- If unresolved, you can report to PenCom through its official channels.
Keep all your payslips; they are your evidence.
Changing jobs and changing PFA
Your RSA stays with you when you change employers. Give your new employer your RSA PIN and PFA name so contributions continue into the same account; do not open a second RSA. PenCom also allows RSA holders to transfer between PFAs under its transfer window rules, usually limited in frequency, so compare PFA performance and service before switching.
Self-employed and informal workers
If you are self-employed or work in the informal sector, PenCom’s Micro Pension Plan allows you to open an RSA and contribute flexibly. It is worth considering if you have no employer pension.
Planning beyond your pension
Your RSA is valuable, but it may not be enough on its own for a comfortable retirement, especially if your salary is low or you start late. Combine it with a personal savings plan and long-term investments. A yearly plan helps you review your RSA balance and set savings goals; our guide to planning your year walks through the process, and the 2027 Printable Planner includes pages for annual money goals.
Frequently asked questions
Can I withdraw my pension to start a business?
Generally no. Outside retirement, the main exceptions are the one-time 25% withdrawal after four months without a job (for those under 50), the mortgage equity provision, and specific cases such as medical incapacity. Voluntary contributions follow their own rules.
What happens to my RSA if I die?
The balance is paid to your named beneficiaries or according to the law. Keep your next-of-kin details current with your PFA.
Is my pension money safe if my PFA fails?
The scheme separates administration (PFA) from custody (PFC), so assets are held by a custodian, not the PFA itself, and PenCom supervises both.
Can I have more than one RSA?
No. You should have only one RSA. Use the same PIN with every employer.
How do I find my PFA if I’ve forgotten?
Check old payslips, contact your former employer’s HR, or contact PenCom, which can help confirm your PFA using your details.
Summary
- Minimum contribution: 18% of monthly emoluments (8% you, 10% employer).
- Access at retirement or age 50, or 25% after four months without a job (once).
- Up to 25% can be used as mortgage equity if you meet PenCom’s conditions.
- Know your RSA PIN, check your statement, and report missing remittances.
General information based on PenCom publications linked above. Rules and guidelines can change; confirm with your PFA or PenCom.
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