Oyo State rewrites pension scheme
July 3, 2026 1:36 am
Oyo State Governor, Seyi Makinde. Photo: Oyo State Govt
GOVERNOR Seyi Makinde’s decision to commence the Contributory Pension Scheme in Oyo State is a welcome policy shift that deserves applause. More importantly, it should serve as a wake-up call to the many states that continue to deny their workers the security of a modern and sustainable pension system.
With this decision, Oyo joins the Federal Capital Territory and six states, including Edo, Ekiti, Kaduna and Lagos, in implementing the pension law. Until now, Oyo had been among the 23 of Nigeria’s 36 states yet to operationalise the enabling legislation.
The Chairman of the Oyo State Pensions Board, Tunji Adekunle, announced the development in a statement issued through the Commissioner for Information, Dotun Oyelade, informing stakeholders, MDAs, and civil and public servants across the state.
According to Adekunle, the scheme will apply to officers employed in the Oyo State Civil Service from January 1, 2025, while full implementation begins on July 1, 2026.
He explained that the contribution structure provides a 12 per cent contribution by the Oyo State Government as the employer and 8.0 per cent by employees.
This is particularly commendable because the combined 20 per cent contribution exceeds the statutory minimum of 18 per cent prescribed under the Pension Reform Act, which requires employers to contribute 10 per cent and employees 8.0 per cent of monthly emoluments. By going beyond the minimum requirement, Oyo is providing its workers with a stronger retirement savings buffer.
The government has also pledged to pay accrued pension benefits immediately upon the commencement of the scheme. It directed all MDAs to submit comprehensive lists of employees recruited from January 1, 2025, signalling its determination to ensure a smooth rollout.
These are the hallmarks of a responsible government that understands that workers deserve dignity not only during their years of service but also after retirement.
Since the PRA was enacted by the Olusegun Obasanjo administration in 2004, replacing the fiscally unsustainable Defined Benefit Scheme, the CPS has transformed pension administration in Nigeria.
The old system depended almost entirely on government budgetary allocations, resulting in chronic delays, huge pension arrears and the heartbreaking spectacle of retirees dying while queuing for verification exercises.
The CPS, supervised by the National Pension Commission alongside Pension Fund Administrators and Pension Fund Custodians, has fundamentally altered that narrative by creating individually funded Retirement Savings Accounts that are professionally managed and insulated from the fiscal pressures that crippled the previous system.
The results speak for themselves. Nigeria’s pension assets have risen to N31.32 trillion as of May 31, according to PenCom’s latest unaudited report, representing an impressive 29.5 per cent year-on-year increase. The growth has been driven by steady pension contributions, prudent fund management and strong returns from the capital market.
The industry’s investment portfolio is now diversified across Federal Government securities, which account for about 56 per cent of total assets, domestic equities valued at about N6.5 trillion, money market instruments worth over N2.6 trillion, corporate debt securities of about N2.2 trillion, as well as investments in real estate, infrastructure and private equity.
This diversified asset mix has strengthened the resilience of the pension industry while providing long-term capital for national development.
Equally encouraging is the continuous refinement of the scheme. Earlier this year, Ogun State introduced an Additional Pension Scheme that raised retirees’ lump-sum benefits from 25 per cent to between 116 per cent and 280 per cent, demonstrating that states can improve on the minimum standards prescribed by law.
To be sure, concerns expressed by some workers’ groups and sectors that have opted out of the CPS underscore the need for continuous review of its operational framework. Transparency, competitive investment returns, prompt payment of benefits and stronger stakeholder engagement will be essential to sustaining confidence in the scheme.
Even though pension funds remain major investors in Federal Government bonds and securities, contributors’ savings are protected by the PRA 2014 and PenCom’s strict investment guidelines, which impose exposure limits and require broad diversification to minimise risk.
Indeed, the National Assembly recently approved Federal Government domestic bonds worth N757.98 billion specifically to settle outstanding pension liabilities under the CPS, underscoring the Federal Government’s continuing obligation to pension contributors.
Oyo State has taken the right path. The challenge now is for the remaining states still outside the CPS to stop postponing the inevitable. Every delay exposes workers to the uncertainties of an obsolete pension regime that has repeatedly failed retirees.
Retirement should mark the beginning of a life of dignity after decades of service, not the start of anxiety, endless verification exercises and unpaid entitlements. Oyo has shown that political will can make a difference. Other states should follow without further delay.
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