Nigerian pension contributions in 2026: employer + employee rules

Pension is the one statutory deduction in Nigeria that has stayed stable through three tax regimes — Finance Act 2020, Finance Act 2023, and now NTA 2025. The rates haven't moved since the Pension Reform Act 2014 (PRA 2014) and they won't move in 2026. What has changed is enforcement: PenCom's annual reports from 2023 and 2024 show a sharp rise in compliance audits, named-and-shamed employer lists, and the 2% monthly penalty being collected rather than negotiated away.

If you run Nigerian payroll, pension is where a small mistake compounds quietly for years. Here's what the law actually requires in 2026.

The headline numbers

Under PRA 2014 as amended, the minimum combined pension contribution is 18% of the employee's pensionable pay:

Side	Rate	Base
Employee	8%	Basic + Housing + Transport (BHT)
Employer	10%	Basic + Housing + Transport (BHT)
Total	18%	BHT

Two things most spreadsheets get wrong:

1. The base is BHT, not gross. Every allowance outside basic / housing / transport (meal, leave, utility, bonus, overtime) is excluded. Computing 8% of gross over-deducts and over-reports.
2. An employer can pay the full 18% if it wishes — the law sets a floor, not a cap. Some employers pay 15% or 18% on the employer side and let staff contribute 3% or 0%. This is legal and must be documented in the employment contract.

Who must enrol

The mandatory contributory scheme applies to all public-sector employers and to private-sector employers once headcount crosses PenCom's applicability threshold (check the current threshold with your PFA — it has been revised since the original PRA 2014 text). The Micro Pension Plan (MPP), launched by PenCom in 2019, covers the informal sector and self-employed on opt-in terms — that's a separate regime with different rules.

Once you cross the applicability threshold, register a corporate account with a PFA (Pension Fund Administrator) promptly and begin remitting from the next payroll cycle.

1. Compute the pensionable pay

For an employee on ₦6,000,000 annual gross, structured as below:

Component	Share	Annual
Basic	60%	₦3,600,000
Housing	20%	₦1,200,000
Transport	10%	₦600,000
Other allowances	10%	₦600,000
Pensionable (BHT)	—	₦5,400,000

2. Apply the 8% / 10% split

Employee contribution = ₦5,400,000 × 8% = ₦432,000 / year Employer contribution = ₦5,400,000 × 10% = ₦540,000 / year Combined monthly remittance = (₦432,000 + ₦540,000) ÷ 12 = ₦81,000 / month

The employee's ₦36,000 monthly is deducted from their payslip (pre-tax, it reduces PAYE). The employer's ₦45,000 is a separate expense line in your books — never netted against salary.

3. Remit within 7 working days

This is where most non-compliance happens. PRA 2014 §11 requires the employer to remit both contributions to the employee's Retirement Savings Account (RSA) within 7 working days of paying salary. Not 7 calendar days, not "the end of the month" — 7 working days.

The flow:

1. Employer pays salary on, say, the 25th
2. By the 7th working day after the 25th, the combined ₦81,000 must hit the PFC (Pension Fund Custodian) designated by each employee's chosen PFA
3. The PFA credits the RSA and sends a remittance confirmation
4. Employer files the contribution schedule with PenCom quarterly

Missing a remittance triggers a 2% monthly penalty on the unpaid amount, compounding until paid. PenCom has been publishing non-compliant employer lists in its annual reports since 2023 — it's no longer a paper threat.

4. Interaction with PAYE under NTA 2025

Pension stays pre-tax under NTA 2025 — the deduction reduces chargeable income before brackets are applied. For the ₦6M employee above:

Gross: ₦6,000,000 Less pension: ₦432,000 Income after statutory: ₦5,568,000 Less rent relief (if declared): up to ₦500,000 → PAYE brackets applied to the remainder

Without the pension deduction, the same employee would owe roughly ₦80,000 more in annual PAYE. Pension is the single largest legal tax saver available to Nigerian salary earners.

5. Voluntary contributions

Employees can make additional Voluntary Contributions (VC) to their RSA on top of the 8% mandatory deduction. PenCom's VC framework distinguishes between contributions that are locked until retirement (and fully tax-deductible) and contributions that are accessible earlier (subject to withholding tax on the withdrawn portion). Exact caps and withdrawal rules are set by current PenCom circulars — confirm with your PFA before enabling large VCs in payroll.

For payroll purposes, the locked portion is pre-tax up to the cap. Flag VCs in your self-service portal — high-income earners use them aggressively as a legal tax shelter.

6. RSA transfer window

Since PenCom operationalised the RSA Transfer System, any employee can switch PFAs once per calendar year via the transfer window. For you as the employer this means:

• Quarterly, check if any staff have moved PFAs
• Update the PFA / PFC details on your payroll system
• Remit the next contribution to the new custodian
• Keep a copy of the transfer confirmation in the employee file

Remitting to the old PFA after a transfer is one of the top causes of "missing contribution" complaints PenCom receives.

Common mistakes we see

1. Computing pension on gross pay. Over-deducts and over-remits. Pensionable is BHT only.
2. Missing the 7-working-day remittance deadline. The 2% monthly penalty compounds; PenCom is collecting it.
3. Not paying the employer portion on time. Some employers deduct the 8% on payslip but "batch" the employer 10% quarterly. That's a direct breach of PRA 2014 — both sides must remit within the same 7-working-day window.
4. Ignoring RSA transfers. Remitting to the old PFA after an employee has transferred triggers a reconciliation mess.
5. Missing the moment you cross the threshold. The day headcount reaches the PenCom applicability threshold, the registration clock starts — don't wait for the fiscal year to turn over.
6. Treating voluntary contributions as post-tax. They're pre-tax up to the PenCom cap — let staff capture VCs in self-service so payroll can deduct before computing PAYE.

What didn't change in 2026

NTA 2025 left PRA 2014 untouched in every dimension that matters for payroll:

• Rates (8% / 10%) — unchanged
• Pensionable base (BHT) — unchanged
• Remittance deadline (7 working days) — unchanged
• Pre-tax treatment — unchanged
• 2% monthly penalty — unchanged
• Applicability threshold (3 employees) — unchanged

If anyone tells you NTA 2025 "changed pension," they're confusing it with the new rent relief or NHF voluntary rules. Pension is the stable pillar.

Does AnooreHR handle this?

Yes — AnooreHR computes pension on BHT automatically, generates the PenCom-format contribution schedule per PFA, flags staff whose remittance window is closing, and posts the employer expense to a separate GL account so your books match the law. When an employee transfers PFAs, the new custodian details flow into the next payroll run without you re-keying anything.

If you want to see how your current pension flow would run under the full NTA 2025 + PRA 2014 stack, book a quick demo — bring one real payroll schedule and we'll reconcile it line by line.

Related: How AnooreHR handles payroll · How to compute PAYE under NTA 2025 · NHF voluntary opt-out guide