Pension Reform Act of 2014

Pension Reform Act of 2014

The Pension Reform Act governs and regulates the administration of the contributory pension scheme for both the public and private sectors in Nigeria.  The Act encourages participation in the contributory pension scheme which applies to two categories of employees. These categories comprise of all employees in the public sector and those in private Organizations with employees numbering 15 and above. 

There is a provision for Private Organizations with less than three employees based on guidelines issued by the National Pension Commission (PenCom). Under the Act, both employer and employee are required to make a minimum of 10% and 8% respectively of the employees monthly emoluments. There is a review of the definition of ‘monthly emoluments” to mean the total emolument defined in the employees’ contract of employment provided it is not less than the total of the employee’s basic salary, housing and transport allowance. 

Pension funds can be invested and this includes specialist investment funds and other financial instruments as approved by the Commission. There are penalties for offences of misappropriation of funds, reimbursement or payment by a Pension Fund Administrator (PFA) or Pension Fund Custodian (PFC) to a staff, officer or director. In situations where the PFC fails to hold funds to the exclusive preserve of the PFA and PenCom or where it applies the funds to meet its own financial obligations, the Act will sanction such appropriately. Jurisdiction resides in the High Courts of the Federal, State ,Federal Capital Territory and National Industrial courts respectively. 

A fund known as the pension protection fund is created to protect the benefit of contributors. Proceeds from this fund are paid to contributors in the form of minimum guaranteed pension. The National Pension Commission (PenCom) determines how compensations will be made where shortfall in payments arise. An employee who disengages from employment before the age of 50 and is unable to secure employment within four months of disengagement is allowed to make withdrawals from the account although not exceeding 25% of the total amount credited to the retirement savings account. 

To be appointed to the office of the Director General, the possession of relevant and professional qualification in pension matters and at least 15years cognate experience is required. Any member of board, employee or agent, officer engaged by a PFA or PFC is expected to maintain confidentiality with respect to information obtained in the course of their duties. Failure to comply will be sanctioned. 

No action can be taken against an officer or employee of the National Pension Commission (PenCom) for any act done in execution of the Act or any other law if not commenced within three months of the act or in the case of a continuous act, within 6 months after the act ceases. There is tax exemption on any interests, profits, dividends, investments and other income accruable to pension funds or assets. 

Any Company that is set up by the Nigeria Social Insurance Trust Fund (NSITF) under the Pension Reform Act No.2 of 2004 shall continue to operate as a PFA. Funds Contributed to PFA’s shall be computed and credited into the respective retirement savings account opened under the Act. 

Any individual who has retired before the commencement of the Act shall be entitled to make withdrawals from the account although not exceeding 25% of the total amount credited to the retirement savings account. Any employee aggrieved with his employer or PFA is obligated to approach the Commission for a redress before exploring arbitration or commencing an action at the National Industrial Court.

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Resources, A. (2024). Pension Reform Act of 2014. Afribary. Retrieved from

MLA 8th

Resources, Africana "Pension Reform Act of 2014" Afribary. Afribary, 08 Jun. 2024, Accessed 15 Jun. 2024.


Resources, Africana . "Pension Reform Act of 2014". Afribary, Afribary, 08 Jun. 2024. Web. 15 Jun. 2024. < >.


Resources, Africana . "Pension Reform Act of 2014" Afribary (2024). Accessed June 15, 2024.