CPS is a contributory, fully funded, privately managed pension scheme that is based on individual accounts. It ensures that everyone who has worked receives his retirement benefits as and when due.

An employee contributes a percentage of his salary and the employer contributes a percentage of the employee’s salary towards the retirement benefits of the employee.

The total contribution will be paid out by the employer directly to a PFC and will be managed and invested by the PFA of the employee’s choice.

It means that the pension liabilities are backed by equivalent cash and assets.

A PFA is an entity licensed by the National Pension Commission (PenCom) and charged with the responsibility of managing and investing the pension funds. Each employee is free to choose a PFA.

A PFC is an entity licensed by PenCom to collect pension contributions, settle investment trades, hold pension assets in safe custody and pay pension benefits.

The PFA manages the pension funds and decides which investments to make while the PFC holds the pension funds assets and acts to the order of the PFA in line with regulations.

No. The employer sends his contribution as well as the employee’s contribution directly to the PFC.

This is similar to a bank account. Every contributor will open Retirement Savings Account (RSA) with a PFA of his choice. The PFA will be required to issue a statement of account at least once every quarter.

Yes. The employee has the freedom to move once a year from one PFA to another.

Nothing happens. The accounts are portable and will remain with you for life. You simply notify your new employer of the PFA that manages your account and thereafter your contributions will be sent to its PFC.

A minimum of eight percent of your monthly basic salary, housing and transport allowances.

A minimum of ten percent of your monthly basic salary, housing and transport allowances. However, the employer may elect to bear the full burden of the scheme provided that the total contribution shall not be less than eighteen percent of the monthly basic salary, housing and transport allowances of the employee.

No. You just save a part of your pay towards retirement and the employer contributes his portion.

Yes. Employees in the private sector who are in employment in an organisation in which there are three or more employees and the public sector.

The old scheme in the public service is one of Defined Benefits. Pension payments are not regular and in some cases never made. The new scheme is a Defined Contribution Scheme, which ensures that pension payments are made monthly, just like salaries thereby making it more sustainable.

Whereas the Defined Benefit pegs the amount a retiree could receive, the new scheme, based on Defined Contribution (DC), is a function of the level of an employee and employer’s contribution in addition to returns on investment. Under the DC, the pension is immediately funded as funds exist from the outset and payments will be made as and when due.

You have the assurance that your retirement is well catered for and that in the event of death your family will have something to fall back on.

PenCom is charged with the regulation and supervision of the pension schemes as well as the powers to formulate, direct and oversee the overall policy on pension matters in Nigeria.

All those administering or holding pension funds are properly licensed and continually regulated and supervised by PenCom. PenCom is empowered to sanction and if need be prosecute defaulting operators.

PFA will issue regular statements to employees.

Upon either retirement or at the age of 50, whichever is applicable.

Yes, upon the later of either retirement or reaching the age of 50, and only to the extent that what is left is sufficient to guarantee that at least 50% of your last salary will be paid to you monthly through a programmed withdrawal or an annuity. If an employee is disengaged before the age of 50 years, he or she may withdraw a lump sum of money not more than 25% of the amount standing to the credit of his RSA provided that such withdrawals shall only be made after four months of disengagement and the disengaged employee does not secure another employment.

The balance is used to fund a programmed withdrawal or procure an annuity upon eventual retirement.

A programmed withdrawal is the method by which the employee collects his accumulated benefits in periodic sums for the length of an estimated life span.

An annuity is an income purchased from a licensed life insurance company approved by PenCom with monthly or quarterly payments during the lifetime of a retiree.

The Act stipulates a minimum retirement age of 50 years.

There is no minimum period required to qualify for pension as each employee has his individualized Retirement Savings Account. Withdrawal from the account is, however, limited to retirement according to an employee’s condition of service or attainment of the age of 50.

Your savings will not be affected as custody of your funds reside with the PFC. Moreover, Pension Funds are invested in a diversified portfolio of investments including Government Securities, Stocks and Real Estate.

You can contact the National Pension Commission.

The government has set up a specialized Regulator of pension schemes and appointed the members of the board of the Regulator. Government will not tamper with the savings, as it will not have access to them. In fact, the Government shall be primarily concerned with ensuring the safety of the savings through the establishment of PenCom.

There will be a huge pool of long-term funds available for investments, which will form a foundation for economic development.

Employee’s right to accrued pension for past service is guaranteed by the Act. In the case of the Public Service of the Federation and Federal Capital Territory where the Scheme is unfunded, the right shall be acknowledged through a Federal Government Retirement Bond which shall be redeemed upon the retirement of the employee. In anticipation of the redemption of the Bond, the Federal Government shall establish a Retirement Benefits Bond Redemption Fund at the Central Bank of Nigeria into which it shall pay 5% of the total monthly wage payable to its employees on a monthly basis. However, in the case of funded schemes and the private sector, employers shall credit the Retirements Savings Accounts of its employees with any funds to which each employee is entitled to and in the event of deficiency, the shortfall shall become a debt and treated with same priority as salaries owed. The employer shall also issue a written acknowledgement of the debt and take steps to meet the shortfall.

Pension Boards in Private Sector already in existence will be allowed to continue to administer their pensions provided if:

  • There is evidence to show that the pension scheme is fully funded at all times and any shortfall is made up within 90 days.
  • The Pension funds assets are segregated from the assets of the employer/company and held by a licensed PFC.
  • The employer must have also effectively managed pension fund assets for at least 5 years before the commencement of the Act, and   have met certain criteria set by PenCom.

It is similar to a licensed PFA, except that it is for a particular pension scheme. Employers managing pension fund assets of N500,000,000 and above may apply to PenCom for a closed PFA licence to enable them administer their own schemes.

Yes, you can still maintain the scheme but it will have to be administered by a PFA.

Not for those contemplated by the law. It is only those that are exempted by law that have a choice as to whether or not to join.

Yes, but under different arrangement. A retiree can draw a lump sum from the balance of his Retirement Savings Account provided the balance after the withdrawal could provide an annuity or fund monthly payments that would not be less than 50% of his monthly pay as at the date of his retirement. The employer may pay gratuity over and above the Scheme payments.

The job of the PFAs is to administer the contributions and invest in such a manner that will safely ensure reasonable returns. Furthermore, the Commission would ensure prudent management of pension assets through supervision and regulation. In addition, the different layers of compensation provided would outperform such erosions if they occur.

The value of the minimum pension guarantee is to be determined from time to time by PenCom.

The functions of the PFA and PFC are so clearly delineated that it is difficult for either to misuse the pension funds and assets to the detriment of the contributor. Furthermore, the PenCom would be unrelenting in protecting contributors’ fund through effective regulation and supervision of the PFAs and PFCs.

Yes. The new scheme entrenches the principles of good governance. The scheme would be regulated and supervised by an independent Commission and would be managed by private sector operators. An employee can choose who manages his Retirement Savings Account including receiving a statement of his account quarterly with details of contributions made and returns on investment.


You can call 01-2782906-20 or send an mail to zpcenquiries@zenithcustodian.com

  • Cash Cheque
  • POS
  • E-payment

This is done by filling deposit slip for the respective PFA.