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
| Party | Role | Example Companies (2025) |
|---|---|---|
| Employee | Chooses their own PFA and gets a unique RSA PIN | Ade chooses Stanbic IBTC Pension |
| Employer (you) | Deducts 8 % from employee’s salary + pays your own 10 % → total 18 % of emoluments | You pay 18 % of Ade’s ₦500,000 monthly salary |
| PFA | Receives the money, invests it, grows it, and manages the RSA | Stanbic 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. |
| PenCom | Regulator – licenses PFAs, sets rules, punishes defaulters | National Pension Commission |
3. Your Monthly Obligations as Employer
Every single month you must:
| Step | What you do | Deadline | Penalty if late |
|---|---|---|---|
| 1 | Deduct 8 % employee contribution from gross salary | Same month | You become personally liable |
| 2 | Add your 10 % employer contribution | Same month | 2 % per month on unremitted amount + possible jail |
| 3 | Remit total 18 % to the employees’ various PFAs (not one place) | Within 7 working days from salary payment | Same 2 % penalty from Day 8 |
| 4 | Upload schedule (names, amounts, RSA PINs) on the PFA’s online portal | Same time as remittance | PFAs 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)
- Register with PenCom online → get an Employer Code
- Ask every employee to choose and open an RSA with any PFA they want (they can change later)
- Collect their RSA PIN (10-digit number) from the PFA welcome letter
- Choose one or two PFAs as your “default” for new staff who haven’t decided
- 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.
| Action | Why it’s compulsory | Typical delay if you skip it |
|---|---|---|
| Remit 100 % of outstanding contributions (including the final month) | PenCom will not clear you | 3–10 weeks |
| Obtain a separate clearance letter from every single PFA that any of your employees used | CAC and FIRS demand it for dissolution | 4–12 weeks per PFA |
| Get PenCom “Compliance Certificate” (some CAC offices now ask for it) | Final proof of zero liability | 2–4 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
| Mistake | Consequence |
|---|---|
| Sending all pension money to only one PFA | Other PFAs will still show you as owing → no clearance |
| Thinking PenCom letter is enough | CAC 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 it | You 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
- Never touch the 8 % employee portion – it is criminal to use it for business.
- Remit within 7 working days every month – no excuses.
- 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).