PENCOM publishes third edition of the Frequently Asked Questions (FAQs) on Contributory Pension Scheme (CPS)

PENCOM publishes third edition of the Frequently Asked Questions (FAQs) on Contributory Pension Scheme (CPS)

PENCOM publishes third edition of the Frequently Asked Questions (FAQs) on Contributory Pension Scheme (CPS)

The National Pension Commission [PENCOM] has published third edition of the Frequently Asked Questions (FAQs) on Contributory Pension Scheme (CPS). FAQ is an information guide and the purpose is generally to provide information on frequently asked questions or concerns. However, the format is a useful means of organising information. PenCom’s FAQ consists of questions and their answers and is documented by the commission.

The new initiatives, incorporated into the published FAQ address, explain the workings of the Micro Pension Scheme, the National Identity Management Commission (NIMC) and the multi fund structure which are all new additions to the scheme.

The commission also addressed questions that may arise on issues of corporate governance and integrity of CPS, compliance with the provisions of the (Pension Reform Act (PRA) 2014 under the CPS, and pension fund investment, among others.


PENCOM spokesperson and Deputy Director, Mr. Peter Aghahowa, stated that the publication is an update to the edition of May 2018; and it incorporates some new initiatives on the CPS which the commission has concluded and begun implementation.

In addition, he said it seeks to address key issues that resonate during interactions of the commission with contributors, retirees and other stakeholders. This is in furtherance of the commission’s efforts at enhancing pension literacy and understanding of provisions of the Pension Reform Act (PRA) 2014.
Highlights Of The New FAQ

  • Who is covered by the Contributory Pension Scheme (CPS)?
The CPS covers all employees in the Public Service of the Federation, Public Service of the Federal Capital Territory, States and Local Governments, the Private Sector and the self-employed persons (Informal Sector).

  • Who Is Exempted From CPS?

Judicial officers, members of the Armed Forces, the Intelligence and Secret Services of the Federation, existing retirees prior to June, 2004 and employees who had 3 years or less to retire as at June, 2004.
  • Can Self-employed Persons Participate In The Scheme?
The PRA 2014 allows self-employed individuals to make voluntary contributions under the scheme towards their retirement. The Micro Pension Scheme is being tailored for this category of participants.

  • What Are Allowable Investment Vehicles?

The PRA 2014 and the Regulation on Investment of Pension Fund Assets issued by the commission clearly stipulate the allowable financial instruments in which pension fund assets can be invested.The instruments allowed are: Equities; Federal Government Securities; State/Local Government Bonds; Corporate Debt Securities; Money Market Instruments; Open/Closed-end Funds; Infrastructure Bonds and  Funds; Private Equity Funds and any securities/instruments that may be approved by the commission, from time to time.
  • What is the quantum of an employee’s benefits under the Life Insurance Policy?

Section 4(5) of the PRA 2014 makes it mandatory upon every employer to maintain a life insurance policy in favour of its employees for at least 3 times the annual total emolument of the employees.Also, the employer is still obligated to pay the equivalent amount of the Group Life Insurance to the deceased beneficiaries in the event that it does not have a current policy with an Iinsurance company.