Nigeria’s pension industry continues to post impressive headline growth figures, but fresh data from the National Pension Commission (PenCom) has revealed a troubling contradiction beneath the surface: the overwhelming majority of contributors enrolled under the informal sector pension framework are not actively saving.
While total pension assets climbed to historic highs in the third quarter of 2025, industry statistics show that 92.4 per cent of Personal Pension accounts remain unfunded, raising concerns about the long-term sustainability of the scheme and the future retirement security of millions of informal sector workers.
A growing pension industry with uneven participation
According to PenCom’s third-quarter 2025 report, Nigeria’s pension industry recorded a 5.93 per cent increase in Total Net Asset Value, rising from ₦24.63 trillion in June to ₦26.09 trillion by the end of September.
The growth was largely driven by improved compliance in the formal sector and strong investment returns from equities and government securities.
However, beneath this overall expansion lies a stark disparity between pension account registration and actual contributions within the rebranded Personal Pension Plan, formerly known as the Micro Pension Scheme.
The plan was designed to bring self-employed individuals and informal sector workers into the contributory pension system, expanding coverage beyond salaried employees.
Despite rising enrolment figures, PenCom’s data indicates that 92.4 per cent of Personal Pension accounts remain unfunded, highlighting a structural weakness in translating registration into consistent savings.
Why 92.4% of Personal Pension accounts remain unfunded
As of September 30, 2025, a total of 206,917 Retirement Savings Accounts had been registered under the Personal Pension Plan.
Of that figure, only 15,677 accounts—representing 7.6 per cent—had received contributions during the quarter. The remaining 191,240 accounts recorded no inflows.
PenCom’s analysis shows wide disparities across Pension Fund Administrators.
AccessARM, which holds the largest share of Personal Pension accounts, had over 107,000 registered RSAs but only about two per cent were funded.
Stanbic IBTC also recorded more than 33,000 unfunded accounts, accounting for roughly 92 per cent of its total under the scheme.
Other PFAs such as Guarantee Trust Pensions, NLPC PFA and Trustfund Pensions posted unfunded ratios above 90 per cent, underscoring the systemic nature of the challenge.
In contrast, a handful of operators showed stronger engagement.
Fidelity Pension Managers recorded funding activity in nearly 88 per cent of its Personal Pension accounts, while FCMB Pensions and Veritas Glanvills also reported comparatively lower unfunded ratios.
The persistence of unfunded accounts suggests that registration alone is insufficient to drive meaningful pension savings among informal sector participants.
Structural challenges facing informal sector contributors
Analysts say the data reflects broader realities of Nigeria’s informal economy, where incomes are often irregular and financial planning competes with daily survival needs.
Many informal workers sign up during awareness campaigns but struggle to sustain regular contributions once initial enthusiasm wanes.
PenCom acknowledged this gap, noting that the high proportion of unfunded accounts limits the growth of accumulated pension assets and weakens the scheme’s effectiveness.
The regulator said the situation calls for targeted strategies such as enhanced participant education, flexible contribution options, incentives for consistent savings, and simplified remittance channels.
Without these interventions, the fact that 92.4 per cent of Personal Pension accounts remain unfunded could undermine the original objective of extending retirement protection to Nigeria’s vast informal workforce.
Formal sector compliance drives asset growth
In contrast to the informal sector’s challenges, the formal pension segment continues to demonstrate resilience.
Total pension contributions in the third quarter stood at ₦503.19 billion, reflecting strong remittance compliance across both public and private sectors.
Private sector contributions surged by over 67 per cent quarter-on-quarter, rising to ₦338.65 billion from ₦202.47 billion in the previous quarter.
PenCom attributed the increase to expanded coverage, improved enforcement, and possibly higher employment-related remittances.
Investment performance also played a significant role.
Pension fund portfolios benefited from favourable equity market conditions and stable government securities, pushing asset valuations higher and reinforcing confidence in the industry’s financial health.
Pension funds and social impact
Beyond asset accumulation, pension savings continued to support broader economic objectives.
During the quarter, 9,477 RSA holders were approved to access up to 25 per cent of their savings as equity contributions for residential mortgage payments.
A total of ₦40.19 billion was approved for disbursement, underscoring the growing role of pension assets in promoting homeownership and financial inclusion.
This contrast—between active formal contributors accessing benefits and informal participants with dormant accounts—further highlights why addressing the funding gap in the Personal Pension Plan is critical.
Outlook and policy priorities
Looking ahead to the fourth quarter of 2025, PenCom expects a relatively stable macroeconomic environment supported by ongoing fiscal and monetary reforms.
Stabilising inflation and a more accommodative policy stance could improve investment returns and support asset growth.
To confront the challenge where 92.4 per cent of Personal Pension accounts remain unfunded, the commission said it will prioritise expanding the Personal Pension Plan through targeted outreach, digital engagement, and the operationalisation of the Approved Pension Agent framework. Compliance drives, data recapture exercises, and diversification of pension fund investments also remain key focus areas.
Early indicators suggest continued asset growth. Pension fund assets rose further to ₦26.66 trillion by the end of October 2025, reflecting a month-on-month increase of about ₦571.8 billion. Federal Government securities continue to dominate investment allocations, while domestic equities remain the most significant non-government asset class.
A system at a crossroads
While Nigeria’s pension industry stands as one of the largest pools of long-term domestic capital, the data shows it is at a crossroads.
Sustained growth in assets masks a deeper vulnerability: millions of informal sector participants are registered but not saving.
Unless decisive steps are taken to convert registration into real contributions, the reality that 92.4 per cent of Personal Pension accounts remain unfunded could limit the scheme’s ability to deliver retirement security and weaken the long-term promise of inclusive pension coverage in Nigeria.
