Business
The Case for Transitioning from the Contributory Pension Scheme to a Hybrid Pension Model under the PRA 2014
Published
4 months agoon
By
Preport
It has become evident that Nigeria’s mandatory Contributory Pension Scheme (CPS) established under the Pension Reform Act (PRA) 2014 (as amended) has not consistently delivered adequate and sustainable retirement income for over two decades of implementation. This is largely attributable to prevailing economic conditions facing the country and the absence of a substantial lump-sum benefit at retirement. These shortcomings have triggered persistent concerns and growing agitation among stakeholders for reform or exit from the CPS. Policy responses have included the introduction of the Enhanced Pension (EP) for only retirees under Programmed Withdrawal (PW), excluding Life Annuity retirees who felt aggrieved and the approval of additional benefit structures alongside the CPS.
Although the PRA 2014 does not allow a complete transition away from the CPS for most employers, it does permit the continuation of pre-existing gratuity or severance arrangements. In line with this provision, the National Pension Commission (PenCom) issued the 2017 Guidelines on Gratuity Benefits, enabling private sector employers to operate defined benefit (DB) gratuity schemes alongside the CPS, subject to annual actuarial valuation to ensure adequate funding. Furthermore, PenCom issued a framework on 13th September 2023 for the establishment of Additional Benefits Schemes (ABS) under the CPS, pursuant to Section 4(4)(a) of the PRA 2014. This framework effectively facilitates a transition toward a hybrid pension model, allowing employers to introduce supplementary benefits, either defined benefit or defined contribution, on a fully funded basis.
A hybrid pension scheme combines elements of both defined contribution (DC) and defined benefit (DB) systems. Under a DC scheme such as the CPS, investment and longevity risks are largely borne by employees. In contrast, DB schemes place these risks on employers. A hybrid arrangement shares these risks between both parties.
The recent initiatives by PenCom, including the reintroduction of gratuity for federal civil servants (equivalent to 100% of annual emolument for those with at least ten years of service, effective January 2026); the PenCare healthcare scheme for low-income retirees; and plans to implement the GMP, have signaled a practical and commendable transition toward a hybrid pension model. This development is significant, timely and commendable.
This article examines potential funding approaches for these defined benefit components and their implications for stakeholders.
Gratuity is a defined benefit paid as a one-time lump sumto an employee upon retirement or exit after a minimum period of continuous service. The funding approach for the newly approved Federal Government gratuity scheme has yet to be clearly defined. Typically, such schemes are non-contributory, with funding provided solely by the employer based on actuarial valuation of liabilities.
In practice, two primary funding models exist: Pay-As-You-Go (PAYG) and fully funded system. A clear understanding of these approaches along with Nigeria’s historical experience of pension schemes administration prior to the 2004 is essential in determining the most suitable modelfor reintroducing gratuity to Federal civil servants.Historically, Nigeria operated a PAYG system. While this model allows flexibility and immediate payment of benefits, it is highly vulnerable to demographic pressures, economic instability, and political interference. Factors such as an aging population, increasing life expectancy, and fluctuating workforce contributions often result in funding imbalances, leading to deficits and delayed payments. In contrast, fully funded systems accumulate and invest contributions during employees’ working years to finance future benefits. These systems offer greater long-term sustainability but depend heavily on investment performance, robust governance, and transparency. They are also exposed risks including market volatility, fund mismanagement, and manipulation of actuarial assumptions to present a more favorable financial picture.
Nigeria’s past reliance on largely unfunded (PAYG) defined benefit schemes resulted in substantial pension liabilities and arrears, prompting the introduction of the CPS. However, challenges persist under the CPS, including inadequate funding of accrued pension rights for pre-2004 employees, irregular remittance of contributions, and failure by some State Governments to implement pension laws in compliance with the PRA 2014.
Selecting a sustainable funding model for gratuity requires careful consideration of the issues discussed above. The reintroduction of gratuity within the CPS must be supported by legislative amendments to the PRA 2014 to prevent duplication of lump-sum benefits.
In March 2026, PenCom launched the Pension Industry Healthcare Initiative (PHI), known as PenCare. This initiative aims to provide affordable and quality healthcare coverage for low-income retirees under the CPS, many of whom lose employer-sponsored health insurance upon retirement. PenCom is expected to develop a comprehensive framework for accrediting healthcare providers, supervising Health Management Organizations (HMOs), and providing free or subsidized health insurance for the low-income retirees.
PenCare is structured as a corporate social responsibility (CSR) initiative funded by PenCom and Pension Fund Administrators (PFAs), rather than directly from pension assets or Retirement Savings Accounts (RSAs). However, since PFAs and PenCom derive revenue from fees on assets under management (AUM), the initiative could indirectly result in higher fees or new charges, potentially reducing contributors’ retirement savings. This means current contributors could effectively subsidize retiree healthcare costs. Additionally, not all contributors may benefit from PenCare, raising equity concerns.
There is also a risk of overlap with the National Health Insurance Authority (NHIA), which already has a mandate to provide healthcare access, including for CPS retirees. Without effective coordination, PenCare could duplicate existing functions, leading to inefficiencies and increased healthcare system-wide costs.
The GMP, provided for under Section 84(1) of the PRA 2014, is a key mechanism for ensuring income adequacy in retirement. It serves as a safety net by guaranteeing a minimum benefit level within the CPS, thereby protecting retirees against poor investment returns and economic volatility.
The GMP functions as an “underpin” within the defined contribution framework (CPS), ensuring that benefits do not fall below a specified threshold (GMP), typically linked to a percentage of final salary at retirement date. Its implementation requires careful actuarial assessment to ensure cost-effectiveness and sustainability.
The Pension Protection Fund (PPF), established under Section 82 of the PRA 2014, is intended to finance the GMP and compensate for investment-related losses. It is funded through contributions from the Federal Government, PenCom, and pension operators, as well as investment income.
However, implementation of the GMP has been delayed, likely due to ongoing efforts by the Federal Government to settle accrued pension liabilities under the CPS. While initial funding of ₦107 billion for the PPF commenced in February 2025, additional resources are required for full implementation. Encouraging voluntary contributions and strengthening complementary welfare initiatives could reduce reliance on the GMP and ease pressure on the PPF over time.
Nigeria is already undergoing a gradual transition from a purely contributory pension system to a hybrid model, both in policy and practice. The introduction of gratuity schemes, healthcare support, and minimum pension guarantees reflects recognition that the CPS alone cannot fully meet retirees’ needs.
For this transition to be effective, State and Local Governments must also adopt similar reforms. In particular, the reintroduction of gratuity schemes across all tiers of government is essential to achieving a uniform and equitable pension system, as envisaged under Section 1(a) of the PRA 2014. Thus, a well-designed hybrid model would offer the best prospect for delivering sustainable and adequate retirement income for Nigerian workers.
Dr Pius Apere is an (Actuarial Scientist and Chartered Insurer), Chairman/CEO, Achor Actuarial Services Limited
The post The Case for Transitioning from the Contributory Pension Scheme to a Hybrid Pension Model under the PRA 2014 appeared first on Business Today NG.
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Business
INTERVIEW: How UNCCD, FAO, World Bank back Nigeria’s fight against drought, land degradation —Official
Published
8 hours agoon
August 20, 2026By
Preport
In this interview, Etim William, Director of the Desertification, Land Degradation and Drought Management Department of the Federal Ministry of Environment, the factors contributing to the degradation of Nigeria’s rangelands and how desertification, land degradation and drought are worsening farmer-herder conflicts and threatening food security across major agricultural hubs in the country.
Excerpt:
PT: What does your department do?
Mr William: Going by the name of the department — Desertification, Land Degradation and Drought Management — our mandate is to combat desertification, address land degradation by restoring degraded lands, and manage drought. Those are the mandates of the department.
PT: In commemoration of World Desertification and Drought Day, what does the ministry hope to achieve? What is the aim and objective of the event?
Mr William: Desertification, drought and land degradation are global menaces. There is hardly any country in the world that does not face land degradation. Desertification and drought also affect many countries. That is why the United Nations Convention to Combat Desertification (UNCCD), one of the Rio Conventions, was established to address desertification, land degradation, and drought.
Every year, the convention commemorates the fight against desertification and drought on June 17. The event seeks to raise public awareness of the impact of drought, land degradation, and desertification on humans, animals, and the environment. Life on land depends on the health of the land. From the land, we get food and natural resources. We have forests, vegetation, animals and genetic resources. So, if the land is degraded, you lose biodiversity and species, both flora and fauna. You lose ecosystems and genetic resources. Agricultural production will also decline because we do not farm in the air; we farm on land. That will inadvertently lead to food insecurity, hunger and poverty. It can also lead to migration because when land is degraded, people tend to leave their original communities in search of greener pastures. This creates competition for land resources, which can also result in conflicts, including farmer-herder conflicts.
This is because rangelands are no longer available in sufficient quantity; many have been degraded. Nobody seems to pay adequate attention to rangelands and their sustainable management. If the rangelands were available and sustainably managed, pastoralists would have less reason to take their herds through people’s farms.
PT: Do we have rangelands in Nigeria?
Mr William: Yes, we have rangelands.
PT: How many rangelands are there in Nigeria?
Mr William: I may not know the exact number. The Ministry of Livestock Development may have conducted an assessment of our rangelands, but I cannot tell you the exact number.
PT: What are rangelands?
Mr William: They are basically grasslands and shrublands. We have grasslands throughout the savanna, including the Guinea and Sudan Savannas.
PT: When you say some of these rangelands are degraded, what do you mean?
Mr William: They are overexploited. Sometimes people set them on fire. Most of them are being converted to croplands, and in the process of clearing the land, fire is used, which contributes to land degradation. Some are also converted to urban infrastructure and other uses.
PT: Are there gazetted rangelands in Nigeria?
Mr William: I think we have a few gazetted ones, but I am not in a position to provide details, as we do not have a direct mandate to manage rangelands. That should be the responsibility of the Ministry of Livestock Development. Our interest is that they are degraded landscapes and degraded ecosystems under the purview of the United Nations Convention to Combat Desertification, and Nigeria is a party to that convention.
PT: What is Nigeria’s commitment to the UNCCD as a signatory?
Mr William: Land degradation neutrality is one of our commitments. The convention focuses on restoring degraded lands, combating desertification and managing drought. All these issues — desertification, land degradation and drought — are closely connected to land. The UNCCD is the only convention that takes land as a critical factor in socioeconomic development. That is why degraded land needs to be restored.
PT: Under the convention, do we have specific targets that Nigeria wants to achieve?
Mr William: Yes. We have a land degradation neutrality target.
Land degradation neutrality is a programme designed by the UNCCD to address land degradation and achieve neutrality, as enshrined in Sustainable Development Goal 15.3.1. The target is to achieve land degradation neutrality.
PT: What does land degradation neutrality mean?
Mr William: Land degradation neutrality is a state or condition where there is no net degradation of land. It is essentially about achieving zero net land degradation. This means maintaining land cover, land productivity and soil organic matter in a productive condition. There should be no net loss in the fertility, productivity, amount or quality of land.
PT: You mentioned that some of our rangelands are degraded. I also understand that Nigeria used to have what were known as grazing routes. How is your department helping to address degradation along these corridors? Are there any breakthroughs you would like to share?
Mr William: Most of these rangelands are located in arid and semi-arid regions. These are areas where our activities are concentrated, particularly areas affected by desertification and drought. Most rangelands are affected by desertification, drought, and climate change. Our mandate to restore degraded lands, combat desertification and manage drought covers these areas. So, when we restore degraded lands, degraded rangelands are also restored. That is how we come in.
PT: How do you go about restoring these lands? Are there specific techniques or interventions?
Mr William: Of course. First, we carry out an assessment. We work with the states where the rangelands and desertification-affected areas are located. We have what is called the desertification frontline states. These are states heavily affected by desertification. There are 11 frontline states where desertification is more pronounced, and its impacts are more severe. They include Sokoto, Kebbi, Zamfara, Kano, Katsina, Jigawa, Adamawa and Taraba, among others.
PT: What are your activities across these states?
Mr William: Restoration. When we talk about restoration, we mean planting trees, sustainable management of the land and providing water facilities in areas affected by drought. We have a technique involving underground water storage systems. We install systems that collect rainwater during the rainy season and channel it into underground storage systems for use when the rains cease during the dry season. We also establish tree plantations using local varieties that can withstand drought and survive with insufficient rainfall. These are some of the things we do. We restore degraded and desertified landscapes and provide sources of water, including underground water systems. We also drill boreholes, including solar-powered boreholes. These interventions help to mitigate the impacts of desertification and drought while restoring degraded landscapes.
PT: In the course of doing this work, what are some of the challenges you face?
Mr William: The challenges in our case are enormous. One of the greatest is insecurity. These areas are affected by banditry, terrorism and kidnapping, so some areas are not accessible because they are high-risk areas in terms of security. Sometimes we cannot go to those areas. In areas we can reach, we sometimes find people vandalising the projects after we have established plantations. They steal solar pumps and solar panels and break the fences. We normally protect our plantations with wire fencing, but some people take cattle into the project sites, where they eat the seedlings. These are some of the challenges we are facing.
Another challenge is funding. The government has many things to address, and many sectors require subsidies and appropriations. What comes to us is just a pittance, so we have to make do with the limited funds available to us.
PT: How has collaboration with international partners such as the UNCCD and GIZ contributed to your work?
Mr William: Partnership has really enhanced our activities. At times, the UNCCD provides us with funding to implement specific projects. For example, before you can assess the extent of desertification and land degradation, you need data. The UNCCD helps us gather reliable data. The UNCCD has also supported our target-setting programme. The first phase of the target-setting process was supported by the UNCCD, during which we set a target of restoring about 10 million hectares of degraded land. There was a second phase of the target-setting process, which helped us to raise the target from 10 million hectares to about 19 million hectares.
The UNCCD has supported all these efforts. We also have other partners, including the World Bank-supported Agro-Climatic Resilience in Semi-Arid Landscapes (ACReSAL) project. The project seeks to address degraded landscapes in the semi-arid region, build resilience against climate change and support climate-smart agriculture. We also have the Food and Agriculture Organisation (FAO), which supported us through a project titled Action Against Desertification in the northern part of the country. Through that project, about 5,000 hectares of degraded land were restored. These forms of support have really helped us achieve some of our mandates.
Even today’s programme, which commemorates World Desertification and Drought Day, was supported by partners such as GIZ. We also received support from the Nigerian Bottling Company. These are some of the partnerships and support the ministry has enjoyed, which have enhanced our delivery.
PT: Looking ahead to the Conference of the Parties (COP), what is Nigeria pushing for? Is there an agenda the country is trying to achieve?
Mr Williams: One of the areas Nigeria will push during the COP is drought management.
Nigeria, alongside other African countries, seeks to advance a legally binding instrument on drought management. This is an African position, and Nigeria supports that position.
We are pushing to establish a legally binding instrument for drought management, essentially a drought protocol. That is one of the areas Nigeria will push for at the COP. Other areas include finance. We need to push for more financial support to meet our national needs and fund our National Adaptation Plan. Regarding land degradation, we need support and partners to help us achieve land degradation neutrality.
These are some of the issues we will push for.
PT: You mentioned finance. How much funding is Nigeria looking at, perhaps over the next five or 10 years, to boost efforts to address land degradation and desertification?
Mr Williams: The figure cannot be fixed or considered sacrosanct because things keep changing from time to time. We have inflation. Something you can do with ₦10 today may cost ₦20 tomorrow.
The fact remains that restoration requires a huge investment that no nation can undertake alone. We need support. We need to collaborate and partner with international organisations. We need their support.
PT: At the COP, how is Nigeria going to negotiate? Will Nigeria negotiate as part of the African bloc?
Mr William: Yes. We have the African Group of Negotiators. Whatever the African position is, Nigeria equally supports that position. We are not going to negotiate anything outside the position of the African group.
PT: You mentioned that about 50 per cent of our rangelands are degraded. How bad is the situation?
Mr William: It is very bad. If you listened to the Honourable Minister’s keynote address and the welcome address, it was reported that about 50 per cent of our rangelands are degraded.
PT: What do you think is causing the degradation of rangelands in Nigeria?
Mr William: There are numerous drivers. Climate change is one. Others include unsustainable use, overgrazing, deforestation, bush burning, competition for land resources and overpopulation. Poverty is also a factor. Land-use change is another. For example, converting rangelands to croplands or using them for infrastructure development contributes to degradation. Mining, including illegal mining, is another factor. There are numerous drivers.
PT: What would you like to see change, especially going into the COP, across some of these badly affected rangeland corridors?
Mr William: Just like the theme of this year’s World Desertification and Drought Day says, “Rangelands: Recognise, Respect, Restore,” we want more action. We want people to stop activities that degrade rangelands. We want people to understand the value of rangelands because, in fact, the issue of rangelands has not attracted sufficient attention.
Through today’s event, we are trying to create awareness about the value and importance of conserving our rangelands. It is not just about talking; we want action. We want attitudinal change. The government alone cannot do it. We want everyone to be involved, including pastoralists, communities, NGOs, private organisations, international communities and donor organisations. We want all of them to partner with the government to address the degradation of rangelands. By the time we achieve that goal, our food security will be strengthened, farmer-herder conflicts will be reduced, biodiversity will be replenished, and we will be able to mitigate the adverse effects of climate change.
Let me give you one example. The Northeast Trade Winds that blow from the Sahara Desert carry dust. We experience this phenomenon, which is often associated with the harmattan. It is also connected to degraded landscapes, rangelands, and forests. If our landscapes were well protected with vegetation and trees, the effects of climate events such as the harmattan would be reduced. If we had sufficient resilience, the impacts of climate change would be minimised. Those are the issues.
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Business
FCCPC Mandates Immediate Removal of Unlabelled Consumer Goods Nationwide
Published
16 hours agoon
August 19, 2026By
PreportBY NKECHI BAECHE-ESEZOBOR—The Federal Competition and Consumer Protection Commission (FCCPC), on Wednesday directed manufacturers, importers, distributors, and retailers to immediately withdraw all non-compliant consumer products from the market or face severe enforcement action.
According to statements issued today, that market surveillance and routine inspections exposed an influx of goods lacking basic, mandatory consumer information.
The statement reads:”The Federal Competition and Consumer Protection Commission (FCCPC) has observed with serious concern the increasing circulation, distribution, and sale of consumer goods that do not comply with prevailing standards and regulations governing product labelling. Market surveillance, routine inspections, and quality assurance activities have revealed products bearing misleading or deceptive information, as well as products without production dates, expiry or best-before dates, batch numbers, manufacturer details, ingredient lists, allergen information, country of origin, and other mandatory labelling information.
“As empowered by the Act, the Commission is mandated to promote consumer safety by ensuring strict adherence to labelling requirements in line with applicable standards set by competent regulatory authorities, including the Standards Organisation of Nigeria (SON), the National Agency for Food and Drug Administration and Control (NAFDAC), among others.
The statement added that “Deceptive, incomplete, or misleading product labelling violates consumers’ right to the information required to make informed purchasing decisions andmay expose them to significant health, safety, and economic risks.
Accordingly, the Commission directs all manufacturers, importers, distributors, and retailers to immediately review their inventories and withdraw from sale any consumer goods that do not comply with applicable labelling requirements. Businesses that continue to distribute or sell non-compliant products risk appropriate regulatory enforcement action.
“In light of the foregoing, consumers are advised to carefully examine product labels before purchase and avoid products with missing, illegible, altered, misrepresented, or poor-quality labels, as well as those bearing false claims or misleading information. “
“Suspected cases of non-compliance should be reported promptly through the Commission’s official complaint channels.”
The post FCCPC Mandates Immediate Removal of Unlabelled Consumer Goods Nationwide appeared first on Business Today NG.
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