91% Of Personal Pension Plan Accounts Unfunded In Nigeria

Efforts to expand pension coverage among Nigeria’s informal sector workers are facing a major challenge, with about 91 per cent of registered Personal Pension Plan accounts reportedly remaining unfunded. The high level of inactive accounts is raising concerns about the ability of the scheme to provide long-term financial protection for millions of self-employed Nigerians, including traders, artisans, professionals and small business owners.

Although the National Pension Commission (PenCom) and Pension Fund Administrators have continued to increase enrolment, available data indicates that only a small proportion of registered participants make regular contributions. Industry stakeholders have linked the low contribution rate to rising living costs, reduced disposable income and unstable earnings among informal workers. For many people operating small businesses or working independently, daily business expenses and household needs often take priority over retirement savings. The voluntary nature of contributions also allows participants to stop making payments after registration, resulting in a large number of inactive accounts.

The Personal Pension Plan provides flexibility for contributors, including access to part of their accumulated savings for certain short-term needs, while the remaining balance is preserved for retirement. However, the arrangement has not been enough to encourage consistent payments among many account holders. Financial literacy remains another challenge, particularly in rural and semi-urban communities. Some informal workers have limited knowledge of how pension funds are managed, how their contributions are invested and the benefits available to them in retirement. The expansion of digital payment platforms has made it easier for contributors to deposit money into their accounts, but irregular incomes continue to make consistent savings difficult.

In response, PenCom and pension operators have intensified awareness campaigns targeting markets, trade associations, cooperatives, industrial clusters and artisan groups. Stakeholders are also exploring micro-savings arrangements that could allow informal workers to contribute smaller amounts more frequently, depending on their earnings. With Nigeria’s pension industry managing assets worth more than ₦25 trillion, increasing active participation among informal workers could strengthen retirement protection while providing a significant source of long-term domestic savings. However, industry stakeholders say greater participation will depend on sustained public education, flexible contribution options and measures that encourage registered participants to keep their accounts active.

Without a significant improvement in regular contributions, millions of informal sector workers could reach retirement age with insufficient savings despite being formally enrolled in the pension system.