From Crisis to Opportunity: Innovative Strategies of CPS for Improving Nigeria’s Retirement Challenges

The Defined Benefits Scheme (DBS) presented significant challenges to retirees, leading to the introduction of the Contributory Pension Scheme (CPS) in 2004. Before the CPS, large pension liabilities made it impossible for the Federal and State governments to meet their pension obligations to retirees. At the same time, the private sector retirement plans offered low pensions. The CPS revolutionized Nigeria’s pension and retirement landscape by introducing innovative solutions such as Individual Retirement Savings Accounts (RSA), Minimum Pension Guarantee (MPG), and segregation of pension management from custody under the regulatory supervision of the National Pension Commission.

The CPS also facilitated the Mobility of Labour, Contributors’ Rights, Retirement Benefits Payments, and the Accumulation of Long-term Funds. The RSA allows participants to open individual accounts where contributions accumulate until retirement. The RSA eliminates pension liabilities, and once an employee exits active service, funds are available for immediate payment of retirement benefits. The RSA also allows members to make voluntary contributions to their RSAs, and PFAs must provide regular/periodic account statements to keep contributors informed. ThisDay