PenCom Moves to Boost Retirement Savings with Higher Employer Contributions

The National Pension Commission, led by Director-General Omolola Oloworaran, is currently reviewing the Pension Reform Act 2014, with plans to increase the statutory pension contribution rate for employers. This move aims to strengthen retirement security by increasing the total mandatory pension contributions. Currently, employers contribute a minimum of 10 percent of an employee's monthly emoluments, while employees contribute 8 percent, totaling 18 percent. According to Oloworaran, the commission is in talks with organized labor and the National Assembly to amend the Pension Reform Act. She emphasized that the process is still in the consultation stage and that all key stakeholders must be on board before any changes are made. 'We are having active conversations regarding the review of the Pension Reform Act with all necessary parties, including labour and the National Assembly,' Oloworaran said. 'It is still at the engagement stage. The rates of contribution will certainly go up, but we must ensure that all key stakeholders buy into it first.' Oloworaran also expressed concern over the slow adoption of the Contributory Pension Scheme by state governments, with only eight out of 36 states currently compliant. She called on governors to show greater political will, stating that 'there has to be more political will. Governors must prioritise their workers and their future when they retire, not just worry about today. All 36 states should be under the Contributory Pension Scheme.' The commission is exploring dedicated income streams for state pension bureaus to address funding constraints. Oloworaran also warned against the practice of deducting pension contributions from workers' salaries without remitting the funds into employees' Retirement Savings Accounts, stating that 'any incoming governor who doesn’t understand the original purpose of those funds could divert them elsewhere. That results in pension obligations skyrocketing and leads to a broken system in the future.'