Everything an Employer in Nigeria Must Know About PFAs

November 29, 2025

1. What is a PFA?

A Pension Fund Administrator (PFA) is a private, licensed company that manages the personal pension savings (Retirement Savings Account – RSA) of every employee under Nigeria’s Contributory Pension Scheme (CPS).

The law (Pension Reform Act 2014) says every employer with 3 or more employees must participate.

2. The Big Picture – How the System Works

PartyRoleExample Companies (2025)
EmployeeChooses their own PFA and gets a unique RSA PINAde chooses Stanbic IBTC Pension
Employer (you)Deducts 8 % from employee’s salary + pays your own 10 % → total 18 % of emolumentsYou pay 18 % of Ade’s ₦500,000 monthly salary
PFAReceives the money, invests it, grows it, and manages the RSAStanbic IBTC Pension, ARM Pension, Leadway Penaire, Sigma, Premium Pension, Radix, etc. (21 licensed PFAs)
PFC (Pension Fund Custodian)Holds the actual cash and securities (separate from the PFA for safety)UBN, First Bank, Zenith, Access, Stanbic Custodian, etc.
PenComRegulator – licenses PFAs, sets rules, punishes defaultersNational Pension Commission

3. Your Monthly Obligations as Employer

Every single month you must:

StepWhat you doDeadlinePenalty if late
1Deduct 8 % employee contribution from gross salarySame monthYou become personally liable
2Add your 10 % employer contributionSame month2 % per month on unremitted amount + possible jail
3Remit total 18 % to the employees’ various PFAs (not one place)Within 7 working days from salary paymentSame 2 % penalty from Day 8
4Upload schedule (names, amounts, RSA PINs) on the PFA’s online portalSame time as remittancePFAs will reject the money without schedule

Example Your accountant pays February 2025 salaries on 28 Feb. → You have until 7 March 2025 to remit pension contributions.

4. How to Get Started (First-Time Employers)

  1. Register with PenCom online → get an Employer Code
  2. Ask every employee to choose and open an RSA with any PFA they want (they can change later)
  3. Collect their RSA PIN (10-digit number) from the PFA welcome letter
  4. Choose one or two PFAs as your “default” for new staff who haven’t decided
  5. Set up standing instructions with your bank or use Remita for bulk payments

5. When You Are Closing the Company (Critical!)

This is where most employers get stuck for months.

ActionWhy it’s compulsoryTypical delay if you skip it
Remit 100 % of outstanding contributions (including the final month)PenCom will not clear you3–10 weeks
Obtain a separate clearance letter from every single PFA that any of your employees usedCAC and FIRS demand it for dissolution4–12 weeks per PFA
Get PenCom “Compliance Certificate” (some CAC offices now ask for it)Final proof of zero liability2–4 weeks

Real-life example (10 employees):

  • 4 use Stanbic IBTC Pension → need Stanbic letter
  • 3 use ARM → need ARM letter
  • 2 use Premium Pension → need Premium letter
  • 1 uses Sigma → need Sigma letter You must collect 4 separate letters.

6. Common Mistakes That Delay Company Closure

MistakeConsequence
Sending all pension money to only one PFAOther PFAs will still show you as owing → no clearance
Thinking PenCom letter is enoughCAC now insists on individual PFA letters
Not paying the very last month (termination month)PFAs will refuse clearance
Employee lost their RSA PIN and never recovered itYou cannot remit correctly → stuck

7. Quick Reference Table – Minimum Contribution (2025)

Monthly Emoluments (Basic + Housing + Transport)Employee 8 %Employer 10 %Total to PFA
₦200,000₦16,000₦20,000₦36,000
₦500,000₦40,000₦50,000₦90,000
₦1,000,000₦80,000₦100,000₦180,000

8. Where to Check the Official List of Licensed PFAs

https://www.pencom.gov.ng → “Licensed Operators”

Summary – Your 3 Golden Rules as Employer

  1. Never touch the 8 % employee portion – it is criminal to use it for business.
  2. Remit within 7 working days every month – no excuses.
  3. When closing the company, collect a clearance letter from every single PFA your employees ever used – no shortcuts.

Do these three things religiously and pension will never delay your salaries or your company dissolution. Ignore them and you will be stuck for 6–18 months (and possibly face personal prosecution).