PenCom targets inflation-proof retirement income for RSA holders

The National Pension Commission (PenCom) is prioritising trust-building and investment reforms to address growing concerns among contributors and retirees under the Contributory Pension Scheme (CPS), PenCom Director-General Ms. Omolola Oloworaran has said.

This comes amid persistent complaints from some Retirement Savings Account (RSA) holders who argue that pension payouts under the CPS are too low to sustain retirees, especially in the face of rising inflation. A number of stakeholders have also renewed calls for a return to the Defined Benefit Scheme (DBS), which guarantees fixed payouts funded by government.

Speaking with journalists on the future of the pension industry, the PenCom DG acknowledged the concerns but maintained that the commission is strengthening reforms to improve outcomes for contributors.

According to her, rebuilding confidence in the CPS is critical to the next phase of growth in the sector.

She said: “We are building trust in the system. This is very crucial to the next phase of growth in the sector this year, and we are putting reforms around this.”

The DG explained that beyond regulatory oversight, PenCom is focusing on improving investment performance to ensure that RSA holders earn competitive and sustainable returns.

“We are improving investments to ensure RSAs get good returns. We want RSA holders to retire and earn a living wage, something that is sustainable no matter the inflation rate,” she added.

Industry analysts say inflationary pressures and currency volatility have eroded the real value of pension payouts in recent years, intensifying dissatisfaction among retirees.

Under the CPS, benefits depend largely on accumulated contributions and investment returns, unlike the DBS where government bears the funding and longevity risks.

A retired Professor, Olukayode Anjorin noted that while the CPS has helped Nigeria reduce pension liabilities and improve transparency compared to the old DBS era, adequacy of retirement income remains a critical challenge.

He argued that stronger investment diversification, improved compliance by employers, and enhanced micro-pension participation could help deepen the asset base and boost returns.

PenCom has in recent months reiterated its commitment to strengthening supervision of Pension Fund Administrators (PFAs), enhancing transparency, and unlocking alternative asset classes to improve long-term yields.

The commission insists that reforms currently underway are designed to ensure sustainability, protect contributors’ funds, and deliver more predictable retirement income.

Advertisement

As debate continues over the long-term viability of the CPS, stakeholders say the success of the scheme will ultimately depend on consistent returns, strict regulation, and the restoration of public confidence in the system.