If you’re reading this, future you is already grateful — because you’ve taken the first step towards securing a financially stress-free retirement with the power of pensions. Yet many Nigerians still don’t fully understand pensions or how to take full advantage of them.
In this article, we’ll be explaining how Nigeria’s pension system works, why it matters, and how CardinalStone Pensions can help you build towards the retirement you deserve — whether that’s relaxing in the Maldives or spending quality time with family.
What is a Pension?
A pension is a regular income paid to you after retirement, typically funded by contributions from either you and your employer, or your own personal contributions if you are an entrepreneur, freelancer, or small business owner with less than 3 employees. In Nigeria, these contributions go into a Retirement Savings Account (RSA), which is managed by a Pension Fund Administrator (PFA) like CardinalStone Pensions.
Here’s how pensions work in Nigeria:
- Your employer contributes a minimum of 10%, and you can also contribute a minimum of 8% off your basic housing and transport allowance from your salary monthly.
- Funds are invested in regulated instruments like stocks and bonds.
- Upon retirement or certain conditions (e.g., health-related treatments or injuries, or loss of employment for up to 4 months, etc), you gain access to all, or 25% of your Assets Under Management (AUM).
- Upon reaching the retirement age of 50 or later, you can have immediate access to your RSA with options for:
- Lump Sum Withdrawal: You can take a significant portion of your funds as a one-time payment
- Programmed Withdrawals: You can receive regular payments from your RSA balance, spread out over your estimated life expectancy.
- Annuity: You can purchase an annuity from an approved life insurance company, which provides regular income payments during your lifetime.
Note: As with any investment, your retirement account’s value may fluctuate based on market performance—another reason why choosing the right PFA is crucial.
A Quick Look at Pensions in Nigeria
Before 2004, pensions in Nigeria were unreliable. The Pension Reform Act of 2004 changed that by introducing the Contributory Pension Scheme (CPS) — giving employees a dependable way to save for retirement.
Key milestones:
- 2004: The Contributory Pension Scheme launched for public and private sectors.
- 2014 update: Increased contributions to 18% and introduced micro pensions for informal workers.
How It Works — At a Glance
- Monthly contributions: minimum 10% (employer) + minimum 8% (employee)
- Managed by: Licensed Pension Fund Administrators (PFAs) like CardinalStone Pensions
- Under certain circumstances: Access to 25% of Assets Under Management (AUM)
- Options at retirement: Lump sum, withdrawal plan, or annuity
- For informal workers: The Micro Pension Plan is available
2024 Snapshot of the Industry:
- 10.1M+ Nigerians enrolled
- ₦18 trillion+ in assets under management
- Returns average 9–14%
- Regulated by PenCom
Why Pensions Matter
In an inflation-prone economy like Nigeria, pensions:
- Provide financial security in retirement
- Help prevent old-age poverty
- Promote home ownership
- Preserve dignity and peace of mind
Whether you’re a salary earner, business owner, or freelancer, you deserve a pension. If you haven’t opened an RSA yet, yesterday might have been the best time to start, but today is the next best, so before you get back to your day, click here to secure your retirement today!
Why Choose CardinalStone Pensions?
At CardinalStone Pensions, we offer more than just retirement savings, we’ll also make sure your wealth grows.
Here’s what sets us apart:
- Experienced fund managers
- Above-average investment returns
- User-friendly digital tools with real human support
- Transparent reporting — no hidden terms
- Holistic retirement planning and education
- Client-first service at every stage of your journey
Now, Take the Next Step — Future You Deserves It
Whether you’re opening a new RSA or transferring from another PFA, CardinalStone Pensions makes the process seamless.
- New to pensions? Open an RSA with us
- Already have one? Transfer to CardinalStone Pensions for better value and service
- Questions? Call us at +234 906 000 1020 or email pensions@cardinalstone.com
