It was reported that the Director General of the National Pension Commission (PenCom), Omolola Oloworaran, announced the launch of Pension Revolution 2.0 in a statement shared via her official X (Twitter) handle on Monday, the 22nd day of September 2025. In the report, it was stated that she described the initiative as more than a regulatory reform but a renewal of trust, an evolution of our system, and a bold national strategy.
Building on the legacy of the 2004 Pension Reform Act, which introduced the Contributory Pension Scheme (CPS), she stated that the Pension Revolution 2.0 marks the most significant advancement in the industry in over two decades. According to the DG, the Pension Revolution 2.0 aims to unlock sustainable source of financing for national development while ensuring greater inclusion and improved retiree welfare.
Guided by the vision of President Bola Ahmed Tinubu according to her, the reforms seek to ensure dignity in retirement, broaden access for all Nigerians, and mobilise long-term savings as reliable capital for national development. As part of the rollout, PenCom has already released some guidelines.
The DG also revealed that within the next three months, PenCom based on the President’s directive will pilot health insurance coverage for retirees and activate the Minimum Pension Guarantee, with the aim of safeguarding retiree welfare and promoting a decent standard of living.[i]
This newsletter will be focusing on three of the new guidelines released by PenCom namely; Guidelines on Corporate Governance for Licensed Pension Fund Operators (LPFOs), the Guidelines for Personal Pension Plan (PPP), and the Guidelines on Foreign Currency Pension Contributions (FCY).
Legal Basis for the Guidelines
The guidelines are mechanisms created by the Commission to execute the legal right granted by the Pension Reforms Act (PRA) 2014 and are consistent with the associated rules provided under the Act. Section 115 of the PRA grants the Commission the general power to make Regulations, Rules or Guidelines as necessary to give full effect to the provisions of the Act. Section 24(a) of the PRA also grants the Commission the power to formulate, direct and oversee the overall policy on pension matters in Nigeria.
Revised Guidelines on Corporate Governance for Licensed Pension Fund Operators (LPFOs)
This set of guidelines applies to Licensed Pension Fund Operators (LPFOs), which include Pension Fund Administrators (PFAs), Closed Pension Fund Administrators (CPFAs), and Pension Fund Custodians (PFCs).
The Corporate Governance Guidelines serve to operationalize the PRA’s regulatory mandate by establishing the specific structures and processes necessary to achieve optimal governance practices. They aim to institutionalize best practices and promote corporate values.
The Guideline was developed essentially to achieve four objectives as provided under section 1.2.1 of the guideline:
- To institutionalize corporate governance best practices in LPFOs in Nigeria.
- To promote awareness of essential corporate values and ethical practices in the Nigerian Pension Industry.
- To show a clear delineation of roles, authority, and responsibilities amongst the Shareholders, Board, and Management of the LPFOs.
- To better align the interests of the Board and Management with those of the Shareholders and other Stakeholders, especially the contributing members (RSA holders).
The Revised Guidelines on Corporate Governance for Licensed Pension Fund Operators (LPFOs) basically reinforces the provisions of the Nigeria Code of Corporate Governance 2018.
Benefit and Implications:
The guidelines impose stringent structural requirements to enforce independence and accountability. Boards must ensure that at least three members or 30% of the Board are Independent Non-Executive Directors (INEDs), whichever is higher.
To prevent entrenchment and ensure fresh perspectives, strict tenure limits are imposed: the tenure for the MD/CEO and Executive Directors (EDs) shall not exceed a maximum of ten (10) years, and the cumulative tenure for an ED who becomes an MD/CEO is capped at fifteen (15) years. INEDs may not serve for more than nine (9) years.
These limits reinforce the Board by continually injecting new energy, fresh ideas, and perspectives.
The creation of mandatory Board Committees including Investment Strategy, Risk Management, Nomination & Governance, and Audit Committees ensures specialized oversight of critical operational areas.
The guidelines also mandate strong ethical and disclosure practices, requiring annual Corporate Governance Evaluation Reports and mechanisms to encourage whistle-blowing for reporting unethical conduct or regulatory breaches.
Overall, these measures promote greater corporate accountability and safeguard the financial integrity of the pension assets managed by LPFOs.
Guidelines for the Personal Pension Plan (PPP)
The Guidelines for the Personal Pension Plan (PPP) establish the operating framework for the voluntary segment of the Contributory Pension Scheme (CPS). These Guidelines are issued pursuant to Section 2(3) of the Pension Reform Act (PRA), 2014, which provides the legal entitlement for employees of organizations with less than three employees and self-employed persons to participate in the CPS, contingent upon the Commission issuing implementation guidelines. The PPP effectively formalizes and sets the strategic direction for expanding pension coverage to self-employed persons, workers in the informal sector who are not mandatorily covered, and formal sector employees making additional flexible contributions. The Micro Pension Plan is now re-designated as the PPP, and all existing Voluntary Contributions (VCs) are deemed to form part of the PPP.
Specifically, the objectives of the PPP as stipulated under section 5.0 are to:
- Prescribe the eligibility criteria for participation.
- Define the framework for making and managing contributions under the PPP.
- Provide the basis for the administration of PPP grants and incentives.
- Ensure transparency, accountability, and uniformity in the regulation and supervision of the PPP.
- Safeguard the rights and interests of PPP contributors and retirees.
Benefits and Implications:
The PPP framework promotes significant financial inclusion and accessibility by extending coverage to the vast informal sector. A key benefit is the establishment of a 50%/50% split for contributions, allocating half for retirement savings and the other half for contingent withdrawal. This provision addresses liquidity needs, allowing contributors temporary access to funds after three months of initial contribution, and subsequently not more than once every two calendar months.
Crucially, the Guidelines mandate that the processing and payment of contingent withdrawals must be completed within a maximum timeframe of 24 hours, enhancing the scheme’s attractiveness and utility for workers with intermittent income.
Furthermore, the scheme allows parents or guardians to register children below the age of eighteen to participate, ensuring funds are built from childhood, provided the parents fund the contributions.
Investment is segregated into specialized sub-funds, including Fund 5A (PPP Conservative Fund) as the default for capital preservation, and Fund 5B (PPP Growth Fund) for those seeking higher risk.
Lastly, LPFOs are mandated to digitize the entire PPP administration process including onboarding, contributions, and withdrawals across multi-access channels ensuring scalability and efficient service delivery.
Guidelines on Foreign Currency Pension Contributions (FCY)
The Foreign Currency Pension Contribution Guidelines establish the regulatory framework for Licensed Pension Fund Operators (LPFOs) to accept, manage, and invest contributions remitted in United States Dollars (USD). These Guidelines are issued pursuant to the powers of PenCom under the Pension Reform Act 2014, and also relying on Section 2(3) which accommodate voluntary participation by Nigerians.
The core objectives of introducing the FCY guidelines as stipulated under Section 1.2 of the guideline are:
- Expand access to the CPS for Nigerians earning in foreign currency, including those living abroad (diaspora).
- Provide a secure and transparent mechanism for making and managing FCY contributions.
- Strengthen the investment potential of pension funds through diversified currency inflows.
- Ensure compliance with local regulatory requirements and international standards, including Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) measures.
Benefits and Implications:
These guidelines fulfil the objective to expand access to the CPS for Nigerians earning in foreign currency and simultaneously strengthen the investment potential of pension funds through diversified currency inflows.
Eligibility extends to Nigerians living and working abroad and Nigerians and foreigners working in Nigeria for foreign companies whose remuneration is wholly or partly in foreign currency.
The contribution structure is favorable for participants, establishing a split where 60% is designated as contingent (available for withdrawal) and 40% is reserved solely for retirement pension. Withdrawal from the contingent portion is permitted six months after the initial contribution, but not more than twice per year before retirement.
FCY contributions are retained and managed in USD in a separate fund known as the Foreign Currency Dollar Fund (FCDF).
Importantly, the Guidelines incorporate robust compliance measures, requiring that any foreign currency contribution exceeding $10,000 be reported to the Nigeria Financial Intelligence Unit (NFIU) within 24 hours from receipt, aligning with AML/CFT standards and safeguarding the integrity of the pension system.
The implication of these guidelines is profound; they encourage diaspora families to save and invest in pension funds that will encourage or motivate them to come home when they retire and live out the rest of their days. It serves as a way to draw Nigerians who live abroad to invest in the country with the diversified currencies that they earn in.
Conclusion
The Pension Revolution 2.0 represents a overhaul of the Nigerian pension system. The new guidelines transform the pension landscape by achieving financial inclusion through the expanded PPP framework, strategically utilizing foreign earnings through the FCY guidelines and strengthening the integrity of the system through rigorous governance standards and tenure limits.
These measures serve as a catalyst to solidify the industry’s role in providing financial security for workers and retirees, thereby meeting the national objective of transforming long-term savings into stable national development capital.
[i]https://businessday.ng/companies/article/pencom-sets-to-unlock-pension-assets-with-pension-revolution-2-0/ accessed 12 October 2025.
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