The Different pension plans in Nigeria

1. Contributory Pension Scheme with a Retirement Savings account (RSA)
2.  Voluntary Contribution Scheme
3.  The Micro Pension Scheme

Contributory Pension Scheme with a Retirement Savings account (RSA)

The Contributory Pension Scheme with a Retirement Savings account (RSA) was established by the federal government  of Nigeria back in 2014, the contributory pension scheme in Nigeria is a fully funded, privately managed by a third-party custodian. Basically, this third party is a custodian of the funds and assets based on individual accounts. This scheme exists to create a system that ensures everyone receives their retirement benefits when due

 it operates by employers and employees contributing certain percentages to the employee’s retirement savings account (RSA). 

The law mandates employees to make a minimum monthly contribution of 7.5% of his or her total monthly earnings. Therefore, this includes monthly basic salary, housing allowance, transport allowance, and more while the employer  contribute a minimum of 7.5% of the employee’s monthly earnings to the RSA of the staff.

The contributory pension scheme in Nigeria is a system that ensures every employee accumulates tangible savings before retirement. Basically, it removes the issues with pension payment delays from the last reform and ensures everyone gets their money when due.

Voluntary Contribution Scheme
The voluntary contribution is an additional contribution plan and it is optional. With this, you can make additional contributions to your pension fund. This scheme is also more flexible. Unlike the RSA, your contribution can be made monthly, quarterly, biannually, or even weekly. This acts as a booster or topup to your pension fund

The Micro Pension Scheme
The micro pension scheme was introduced to make provision for self-employed individuals. Micro Pension scheme in Nigeria covers three strata – Lowest, Middle and High income earners.

This plan allows for more flexibility for entrepreneurs, traders, professionals, and other self-employed persons that don't qualify for the contributory pension scheme.

If you're self-employed, this is the plan you should opt-in for. The target of the Micro Pension Scheme is the self-employed in various trades and professions in Nigeria – artisans, accountants, lawyers, mechanics, tailors, market men/women, hair dressers, architects, engineers, etc.

With this scheme,  Self-employed Nigerians will be guaranteed funds to fall back to when they are due for retirement.

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