- Oyo State has adopted the Contributory Pension Scheme for its workers, joining other states already implementing the system
- The scheme introduces higher pension contributions aimed at improving retirement security for civil servants
- The move is part of broader pension reforms designed to ensure better welfare for retirees
Governor Seyi Makinde’s move to introduce the Contributory Pension Scheme (CPS) in Oyo State has been praised as a major step toward strengthening retirement security for workers and modernising the state’s pension system.
With the policy shift, Eko Hot Blog reports that Oyo joins the Federal Capital Territory and several states including Lagos, Edo, Ekiti and Kaduna that have already activated the scheme, after previously remaining among the majority yet to fully implement the pension law.
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The Chairman of the Oyo State Pensions Board, Tunji Adekunle, announced that the arrangement will cover civil servants employed from January 1, 2025, while full enforcement will begin on July 1, 2026.
He explained that the contribution model allocates 12 per cent from the state government and 8 per cent from employees, making a total of 20 per cent, which is higher than the minimum requirement set by the Pension Reform Act.
Officials say the policy is aimed at improving financial security for workers after retirement and ensuring a more reliable and transparent pension system.
The CPS, introduced in 2004 to replace the old defined benefit structure, was designed to address long standing issues such as delayed payments, pension arrears and hardship faced by retirees under the previous arrangement.
Unlike the old system, it operates through individually funded Retirement Savings Accounts managed by licensed pension administrators under the regulation of the National Pension Commission (PenCom), ensuring greater accountability and protection of funds.
Over time, the scheme has contributed to significant growth in Nigeria’s pension assets, now valued at over N31 trillion, supported by steady contributions and investments across government securities, equities and other financial instruments.
The diversification of pension funds has also helped strengthen the financial system while providing long term capital for national development.
Some states have continued to improve on the scheme by enhancing retirement benefits beyond the statutory minimum, reflecting ongoing reforms in the sector.
However, concerns remain among some labour groups about transparency, investment returns and the need for faster benefit payments, which experts say must be addressed to sustain confidence in the system.
Despite these challenges, the Federal Government has continued efforts to settle pension liabilities, including the issuance of bonds to clear outstanding obligations under the scheme.
Oyo State’s decision is being viewed as part of a wider national push toward pension reform, with calls for other states yet to adopt the CPS to follow suit in order to protect workers from the limitations of the old pension system.
The reform is expected to ensure a more dignified and secure retirement for public servants across the country.
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