Nigeria faces a looming social and economic challenge as more than 75 million workers in the informal sector are projected to retire without any form of pension or structured retirement savings, the National Pension Commission (PenCom) has said.
The Director-General of PenCom, Ms. Omolola Oloworaran, raised the concern in Abuja during the presentation of a licence to Awabah, an accredited pension agent under the commission’s newly introduced pension expansion framework.
Oloworaran said the development underscores a major gap in Nigeria’s social protection system, noting that while pension reforms over the past two decades have stabilised retirement benefits for formal sector employees, the vast informal workforce remains largely excluded.
According to her, Nigeria’s informal sector accounts for over 90 per cent of the national workforce, yet pension participation among this group remains negligible, leaving millions vulnerable to poverty in old age.
She warned that the situation poses long-term risks not only to individuals but also to the country’s economy, as retirees without income support are more likely to depend on family members or government welfare systems.
“When people retire without savings, the burden shifts to households and, ultimately, the state. This weakens economic resilience and deepens inter-generational poverty,” the PenCom boss said.
Oloworaran explained that Nigeria’s Contributory Pension Scheme (CPS), introduced under the Pension Reform Act of 2004, had significantly improved pension administration by replacing unfunded liabilities with a regulated savings structure.
She noted that the reform had led to the growth of pension assets to over ₦27 trillion and the registration of more than 10 million Retirement Savings Account (RSA) holders, but stressed that the benefits had been concentrated mainly in the public and organised private sectors.
To address the imbalance, PenCom is expanding the Micro Pension Plan (MPP) and deploying accredited pension agents to take pension services directly to informal workers, including traders, artisans, farmers, transport operators and small business owners.
Oloworaran said the commission was also leveraging digital technology, mobile platforms and flexible contribution models to encourage voluntary participation, allowing contributors to save based on their income patterns.
She added that pension contributions remain tax-deductible, describing the policy as an incentive designed to make long-term savings more attractive to self-employed individuals.
Speaking at the event, the Chief Executive Officer of Awabah, Mr. Tunji Andrews, said the firm’s accreditation would help bridge the gap between pension operators and informal workers who traditionally lack access to financial planning tools.
He said Awabah’s model allows workers to make small, regular contributions while also accessing complementary benefits such as insurance coverage.
Financial analysts say expanding pension coverage to the informal sector is critical to Nigeria’s long-term development, as it could enhance domestic savings, strengthen capital markets and reduce future social welfare pressures.
They argue that without urgent and sustained action, millions of Nigerians risk entering retirement without financial security, a situation that could worsen inequality and strain public resources in the years ahead.
