Contributory Pension Scheme

What is Pension?
Pension is a retirement fund for an employee paid into an employee's Retirement Savings Account (RSA) by the employer (who pays 10%) and the employee (who pays 8% of his/her gross salary). When such an employee has reached a certain age or based on a health condition cannot cater for his/her needs in old age, an annuity is paid to the employee which is calculated by the terms of the pension.
The Pension industry in Nigeria currently operates using the Contributory Pension Scheme (CPS). This Scheme requires pension funds to be privately managed exclusively by licensed Pension Fund Administrators (PFA) while the Pension Fund Custodians (PFCs) are responsible for safely keeping the custody of pension assets on trust on behalf of contributors.

The Pension Reform Act

The Pension Reform Act (PRA 2004) of the Federal Republic of Nigeria (in this Act referred to as “the Scheme”) speaks to the payment of retirement benefits to employees under the Contributory Pension Scheme whom the Scheme applies under this Act.