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The short answer
There is no fixed pension amount under Nigeria's contributory scheme: what you get depends on how much reaches your RSA, the returns your PFA earns and how long the balance must last. In the labelled example below, ₦45,000 a month for 25 years becomes about ₦26.8 million at an assumed 5% a year, or about ₦42.8 million at 8%, and PenCom's rule that the remaining balance must pay at least 50% of your final annual pay then decides how much can come out as a lump sum.
Why there is no single answer
Under the Contributory Pension Scheme (CPS) your pension is not a promise of a percentage of salary, as it was under the old defined-benefit schemes. It is whatever your Retirement Savings Account (RSA) can pay. Four things decide the size:
- Contributions: at least 18% of monthly emoluments, 10% from the employer and 8% from you, under the PRA 2014 as summarised by PwC, plus any voluntary contributions.
- Continuity: months with no remittance, career breaks or unpaid arrears reduce the balance permanently.
- Returns: the net returns your PFA earns in the fund you are in, after fees. The legal minimums are set out in pension contribution rates.
- Payout rules: PenCom's programmed withdrawal template, which works out a monthly amount from the balance using a mortality table, an assumed rate of return and fees.
The example: 25 years of contributions
Ada earns monthly emoluments (basic, housing and transport) of ₦250,000. Her employer adds 10% (₦25,000) and deducts 8% (₦20,000), so ₦45,000 reaches her RSA each month. To keep the arithmetic clear, assume her pay never changes and she contributes for 25 years (300 months) without a gap.
| Assumed net return a year | Total paid in | RSA balance after 25 years |
|---|---|---|
| 0% (no growth) | ₦13,500,000 | ₦13,500,000 |
| 5% | ₦13,500,000 | about ₦26,797,937 |
| 8% | ₦13,500,000 | about ₦42,796,188 |
The returns are compounded monthly. The gap between the rows shows why fund choice and fees matter over decades: the same ₦13.5 million paid in more than triples at 8% but roughly doubles at 5%.
Turning the balance into a pension
At retirement (or age 50, whichever is later, per PenCom's guidance note on the programmed withdrawal template), the balance can pay a monthly or quarterly pension through programmed withdrawal from your PFA, or buy a life annuity from an insurer. Part may be taken as a lump sum, but only if what remains can pay a pension of not less than 50% of your annual remuneration at the date of retirement (guidance note, section 1.2(c)).
Ada's floor
Ada's annual remuneration at retirement is ₦3,000,000 (₦250,000 × 12). Half of that is ₦1,500,000 a year, or ₦125,000 a month. That is the minimum pension her remaining balance must be able to support.
PenCom's template uses an adjusted A55 mortality table and the PFA's assumed return; we cannot reproduce it exactly. As a simplified stand-in, assume the pension must last 20 years and the balance keeps earning 5% a year. On that basis, paying ₦125,000 a month needs about ₦18,940,664.
| Scenario | Balance at retirement | Kept to fund ₦125,000 a month | Largest lump sum | Monthly pension if no lump sum |
|---|---|---|---|---|
| 5% during saving | ₦26,797,937 | ₦18,940,664 | about ₦7,857,273 | about ₦176,855 |
| 8% during saving | ₦42,796,188 | ₦18,940,664 | about ₦23,855,524 | about ₦282,436 |
Check: ₦26,797,937 − ₦18,940,664 = ₦7,857,273, and ₦42,796,188 − ₦18,940,664 = ₦23,855,524. The "no lump sum" column assumes the whole balance is drawn over 20 years at 5%.
In the 8% case the largest lump sum would be about 56% of the balance. PenCom's guidance note refers to lifting an earlier restriction that capped lump sums at 50% of the RSA balance, so ask your PFA how its current computation treats that cap. Under a 50% cap, Ada could take ₦21,398,094.
Starting ten years later
Example only. If Ada had begun contributing ten years later and saved for 15 years instead of 25, she would have paid in ₦8,100,000 and, at the same assumed 5%, finished with about ₦12,028,002. That is below the ₦18,940,664 needed for her ₦125,000 floor in our simplified model, so no lump sum would be available and the whole balance would go to her monthly pension. Ten fewer years of contributions cost her more than half of the final balance.
What the example leaves out
- Pay rises: most people's emoluments rise over a career, which raises both contributions and the 50% floor.
- Inflation: ₦125,000 in 25 years will buy far less than it does today. Think in today's money when you plan.
- Gaps: one year without remittance at the start of a career costs more than one year near the end, because it misses the most compounding.
- Fees: PFA fees reduce net returns; see PFA fees.
- Annuity pricing: an insurer's annuity quote will differ from programmed withdrawal; compare in programmed withdrawal or annuity.
Steps to estimate your own
- Download your latest RSA statement for your current balance and monthly inflow.
- Count the years to 60 or your expected retirement date.
- Run the same arithmetic at two or three return assumptions, not one.
- Work out 50% of your expected final annual pay; that is your pension floor.
- Ask your PFA for an illustration using its own template a few years before you retire.
For the rules on the lump sum itself, see how much you can take at retirement.
Where Pryme fits
If the gap between your projected pension and the life you want is wide, regular saving beside the RSA helps. Pryme's Naira Savings Boxes include Fixed and Investment Boxes, with rates shown in the app, and your Personal Assistant can remind you to top up.
Questions people ask
How is pension calculated in Nigeria under the RSA scheme?
From your RSA balance. PenCom's programmed withdrawal template uses a mortality table, an assumed return and fees to set a monthly amount; there is no fixed percentage of salary.
How much pension will I get on ₦250,000 salary?
It depends on years contributed and returns. In our labelled example, 25 years at ₦45,000 a month gives about ₦26.8 million at 5% or ₦42.8 million at 8%.
Can I take all my pension as a lump sum at retirement?
Not usually. The balance left after the lump sum must fund a pension of at least 50% of your annual remuneration at retirement.
When can I start receiving my pension?
At retirement or age 50, whichever is later, according to PenCom's guidance note; earlier access is possible only in limited cases such as job loss.
Sources
- PenCom, Guidance Note on Revised Programmed Withdrawal Template, Version 2 (Dec 2024) · accessed Oct 2026
- PwC Nigeria, Tax Bites: Pension Reform Act 2014 (July 2014) · accessed Oct 2026
- PenCom, Frequently Asked Questions (2023 edition) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.