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State governments across Nigeria are grappling with a staggering pension debt estimated at approximately ₦1 trillion, according to a comprehensive review. Despite the enactment of the Pension Reform Act (PRA) 2004, replaced by PRA 2014, which led to the establishment of the Contributory Pension Scheme (CPS) for all workers in 2004, many successive governors have failed to fully embrace the CPS, leaving pensioners in dire straits.

The situation varies among the 36 states, with 25 at different stages of implementing the CPS. Some states are still in disarray, while six have bills pending, and another six have laws governing the Contributory Defined Benefits Scheme (CDBS). Additionally, 16 states have established pension bureaux or boards, with 11 successfully remitting employer and employee pension contributions in accordance with the CPS.

Notably, nine states—Bayelsa, Kogi, Abia, Taraba, Imo, Sokoto, Ebonyi, Oyo, and Bauchi—have yet to adopt the scheme, while states like Lagos, the Federal Capital Territory (FCT), Osun, Kaduna, Ekiti, Edo, and Ondo have successfully implemented it.

Analysts have criticized the politicization of pension payments, emphasizing that pensions should be recognized as earned dues rather than favors bestowed by governors.

However, the road to full CPS implementation faces hurdles from pension and labor unions, who at times, obstruct the transition of workers and retirees into the scheme.

The National Pension Commission (Pencom) has been unable to enforce CPS adoption among states due to the shared jurisdiction of pension matters between federal and state governments. Consequently, PenCom relies on moral persuasion to encourage states to join or fully implement the scheme.

Section 2(1) of the PRA 2014 extends the provisions of the Pension Act to various employment sectors, including public services, at the federal, state, and local government levels, as well as the private sector.

Addressing the slow adoption of the scheme, Mrs. Aisha Dahir, Director-General of PenCom, highlighted that the Pension Reform Act 2014 aimed to domesticate CPS at the sub-national level. The Constitution of the Federal Republic of Nigeria 1999 (as amended) entrusts states with regulating pension and gratuity for their public service employees.

She noted, “It would be contrary to constitutional provisions for the commission to enforce the provisions of the PRA 2014 on the states without recourse to the extant laws and prevailing economic limitations of the states.”

As a means to encourage sub-national governments, PenCom has prohibited Pension Fund Administrators (PFAs) from investing in the bonds of states that have yet to comply with the scheme.

The Nigeria Union of Pensioners (NUP) in the southwest region expressed dismay over the non-payment of pensions and gratuities, claiming that the governors owe the zone approximately ₦300 billion.

Ivor Takor, the Executive Director of the Centre For Pension Right Advocacy, stressed the importance of securing pensioners’ rights, citing the 1999 Constitution as amended. He called upon state governors to prioritize pensioner’s rights and ensure their financial security during retirement.

Takor also emphasized the need for all states to enact pension laws, adopting the Contributory Pension Scheme to protect the welfare of public servants and ensure they receive their well-deserved pensions and benefits.


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