Labour & Social

Pension Reform Act 2014

Strengthened the Contributory Pension Scheme — raised employer/employee contributions to 10%/8%, brought informal sector into scope.

Signed
2014-07-01
Status
In force

1 Background

The PRA 2014 amended the original 2004 Act that created the Contributory Pension Scheme. Key changes: raised mandatory contributions to 10% employer + 8% employee (was 7.5% each), brought micro-pension schemes for the informal sector into scope, strengthened PenCom's enforcement powers against errant employers, and clarified the death-benefit-payment regime. The CPS now has ~₦20tn in assets under management — the largest institutional pool of long-term capital in Nigeria.

2 Key provisions (6)

01
Mandatory contributions: 10% employer + 8% employee (was 7.5% each)
02
Micro-pension scheme for informal sector
03
PenCom enforcement powers strengthened
04
Death-benefit payment regime clarified (up to 5x annual pay)
05
Mortgage-purchase from RSA balances permitted
06
CPS coverage extended to all employees in entities with 3+ staff

3 What changed in practice

CPS assets grew from ₦4tn (2014) to ₦20tn+ (2025)
Informal sector workers can now contribute via micro-pension
PenCom's enforcement actions against employers significantly increased

4 Who it affects

EmployeesEmployersSelf-employed (informal sector)PFAs

5 What it repealed / replaced

Other laws in Labour & Social