Understanding the Players in the Nigerian Pension Industry

Since 2005, when the pension industry emerged as a prominent sector in Nigeria, it has witnessed significant growth and evolution. Over the years, numerous players have entered the industry, shaping its landscape. Also, pension fund assets have witnessed significant growth over the years. Between 2020 and 2021, the pension fund assets increased by 9.02% from N12.31 trillion to N13.42 trillion.

Currently, the pension industry is comprised of seven key players: The National Pension Commission (PenCom), The Pension Fund Administrators (PFAs), The Closed Pension Fund Administrators (CPFAs), The Pension Fund Custodians (PFCs), Pension Transitional Arrangement Directorate (PTAD), Pension Fund Operators Association of Nigeria (PenOp) and Recovery Agents. All of these would be explained below.

  1. The National Pension Commission (PenCom): PenCom is the regulator of the Nigerian pension industry. The Pension Reform Act 2004 established the National Pension Commission (PenCom) as the body to regulate, supervise and ensure the effective administration of pension matters in Nigeria.

Some of the functions of the Commission include:

  • Regulation and supervision of the Scheme established under the Act.
  • Issuance of guidelines for the investment of pension funds.
  • Approving, licensing, regulating and supervising pension fund administrators, custodians and other institutions relating to pension matters as the Commission may, from time to time, determine.
  • Establishing standards, rules, and guidelines for the management of pension funds under the Act.
  • Ensuring the maintenance of a National Data Bank on all pension matters.
  • The Pension Fund Administrators (PFAs): They are saddled with the responsibilities of opening retirement savings accounts for their registered clients, investing and managing the funds on behalf of their clients. Upon retirement, they are to pay retirement benefits to the retired employees, which include monthly pensions. Currently, there are about 22 licensed PFAs in Nigeria, some of which include Stanbic IBTC Pension Managers Ltd, Sigma Pensions Ltd, ARM Pension Managers Ltd, Trustfund Pensions Plc, Leadway Pensure PFA Ltd, etc.
  • The Closed Pension Fund Administrators (CPFAs): These are pension funds administrators of some private companies that were in existence before the start of the Contribution Pension Scheme (CPS) in 2004. They operate just like the PFAs, but they only administer the pensions of their sponsor company alone unlike the PFAs that manage pensions for any employee that registers with it irrespective of the employer. Employees in CPFA are allowed to opt out and join the mainstream PFA of their choice if they so wish. Also, there are currently 6 CPFAs in Nigeria.
  • The Pension Fund Custodians (PFCs): These are licensed pension operators that are saddled with the responsibilities of keeping in safe custody pension assets on behalf of employees. A PFA chooses the PFC it will work with. The PFCs are independent of the PFAs and are unrelated. All instructions to move funds in and out of the Pension Funds accounts must pass through the PFC who are obliged to carry out the instructions so far as they comply with the regulatory rules and procedures. Any instruction that is not in line with laid down rules and regulations as stated in the guidelines issued by PenCom will not be carried out. Such reasons would be communicated to the PFA for correction. There are currently four (4) PFCs in the pension industry, which are First Pension Custodian Nigeria Ltd, UBA Pensions Custodian Ltd, Zenith Pensions Custodian Ltd, etc.
  • Pension Transitional Arrangement Directorate (PTAD): The PTAD was established as part of the transitional arrangements for the public sector from the old Defined Benefit Scheme (DBS). Accordingly, PTAD took over the functions of the various Pension Departments of the Public Service which are the Civil Service Pension Department (CSPD), the Police Pension Department (PPD) and the Customs, Immigration and Prisons Pension Office (CIPPO). The PTAD is responsible for payment to existing retirees of the Federal Government that retired up to June 2007 and are thus exempted from the Contributory Pension Scheme (CPS) as stated in the Pension Reform Act (PRA).
  • Pension Fund Operators Association of Nigeria (PenOp): This is an independent, non-governmental, non-political, and non-profit-making body established to promote the operations of the pension industry, provide for self-regulation, and ensure that international best practices relating to the industry are observed by the operators registered in Nigeria. Its members comprise of all the PFAs, CPFAs and PFCs in the pension industry and all of these are presently 29 in number.
  • Recovery Agents: These are private consultants employed by PenCom to help confirm whether employers have remitted monthly deducted pensions correctly or not. They report any infraction or irregularity discovered to PenCom and help calculate interest penalties because of non-remittance or under-remittance of pension contributions.

Contribution of Pension Industry Players to the Nigerian Economy

The following are non-exhaustive ways in which the pension industry has contributed and will continue to contribute to the Nigerian economy:

  • The pension industry and its players have been extremely beneficial to the economy. The pooling of savings into pension assets has had a favorable impact by boosting the cash available for investment in fixed assets such as infrastructure and machinery, which is crucial for Nigeria’s economic progress.
  • Pension assets represented 8.02% of Nigeria’s nominal GDP in 2020 which was because of an increase in contributions and returns from the investment in assets and growth in the number of Retirement Savings Account (RSA) holders.
  • As of 2020, Pension Fund Administrators (PFAs) invested 6.8% of pension funds in private sector corporate bonds, providing the firms with long-term cheap funding to finance growth.
  • As of 31st December 2019, 66.64% of pension assets was invested in Federal Government securities, providing the Federal Government with low-cost long-term funds to implement its capital budget.

From this article, we can see the major players in the pension industry and a brief description of what they do. It should also be noted that all these players are connected one way or the other.


Zainab Ibigbami,
Financial Analyst I
Leonine Investment Services

Communications and PR Analyst at Leonine Investment Services Limited | + posts

Abdulsamod Balogun leads Communications and Public Relations at Leonine Investment Services Limited. He's excited about new media, technology and public policy. When he's not working, he's catching up on movies and books.

Leave a comment