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The short answer
Under the Pension Reform Act 2014, a private employer with three or more employees in Nigeria must pay at least 10% of each employee's monthly emoluments into their retirement savings account, with the employee contributing at least 8%. Contributions must reach the employee's chosen pension fund administrator within seven working days of paying salary, and the employer must also hold group life insurance worth at least three times annual total emolument.
UK pension auto-enrolment does not follow your staff to Lagos. Nigerian employees are covered by Nigeria's own Contributory Pension Scheme, regulated by the National Pension Commission (PenCom). Whether your UK company, an employer of record or a Nigerian subsidiary is the employer, someone has to run it.
Who is covered
PenCom's Micro Pension framework states that the Act applies to the public service and to private sector organisations with three or more employees. Some older summaries quote a higher headcount; PenCom's own current statement is three. Section 2(3) lets employees of organisations with fewer than three staff, and the self-employed, join under PenCom's guidelines, which is the Micro Pension Plan.
The rates and the deadline
| Item | Rule | Source |
|---|---|---|
| Employer contribution | At least 10% of monthly emoluments | PRA 2014, via ThisDay |
| Employee contribution | At least 8% of monthly emoluments | PRA 2014, via ThisDay |
| Remittance | Not later than seven working days after salary is paid | PRA 2014, via ThisDay |
| Group life insurance | At least 3 times annual total emolument; certificate displayed | PenCom notice, s.4(5) |
| Choice of fund | Employee picks their own PFA and keeps one RSA | PRA 2014, via ThisDay |
The percentages are minimums. An employer can agree to pay more, or to pay the employee's share too, as a benefit. Which pay elements count as emoluments is set by the Act; ask the employee's PFA to confirm what you should include before your first run.
Worked example (illustrative)
Example: an employee's monthly emoluments are ₦600,000. The employer pays 10% = ₦60,000. The employee's 8% = ₦48,000 is deducted from pay. Total remitted: ₦108,000 a month, sent to the employee's PFA within seven working days of payday. Over 12 months that is ₦1,296,000 (12 × ₦108,000). The employee's ₦48,000 is also deductible when their PAYE is worked out, because the Nigeria Tax Act 2025 allows pension contributions as a deduction.
How to set it up from the UK
- Confirm who the legal employer is. If you use an employer of record, the EOR runs pension under its contract; check that the contract says so.
- Ask each employee for their PFA and RSA PIN. A new employee without one opens an RSA with a PFA of their choice.
- Register as an employer with the PFAs your staff use, following each PFA's employer onboarding.
- Buy group life cover from a Nigerian insurer before staff start, and keep the certificate.
- Each month, pay salaries, then send the combined 18% (or more) with a schedule naming each employee and PIN.
Pension funds and payroll timing in Nigeria need naira in a Nigerian account. If you fund from sterling, build in time for conversion so a weekend or a public holiday does not push you past the seven working days; see budgeting naira payroll from pounds.
What about UK pension rules?
For staff who live and work only in Nigeria, the Nigerian scheme is the one Nigerian law requires. Whether UK auto-enrolment duties reach anyone working wholly overseas is a separate question; ask your UK pension provider before enrolling anyone abroad. Staff seconded from the UK to Nigeria are a separate question, covered in UK staff seconded to Nigeria.
If you have fewer than three staff
Below the three-employee line the Act does not force the employer to contribute, but section 2(3) lets those employees take part under PenCom's guidelines, through the Micro Pension Plan or a voluntary arrangement with a PFA. Many small UK companies still offer the 10% and 8% from the first hire: it is the benchmark Nigerian candidates compare offers against, and it avoids changing contracts when the fourth person joins. If you do offer it, put it in the written contract so it is clear whether it is a statutory or a contractual benefit.
Common mistakes UK employers make
- Paying the whole 18% as extra cash in salary instead of into the RSA. The law requires remittance to the PFA, not a cash allowance.
- Remitting late because sterling-to-naira conversion was left to the day before. The seven working days run from payday.
- Forgetting group life cover for new joiners. The PenCom notice applies to all employees.
- Not keeping schedules. The PFA needs each employee's PIN and amount, and you need proof of every remittance for audits and tax clearance.
What to check first
- Headcount in Nigeria: three or more brings you into the Act.
- Who the employer of record is in each contract.
- Group life cover in place and the certificate on file.
- A monthly calendar: salary date, then pension within seven working days, then PAYE.
The Nigeria library covers the rates for Nigerian employers in more depth: pension contributions in Nigeria.
Where Pryme fits
Pryme payroll pays salaries in naira, and the Compliance agent can prepare the monthly pension schedule and remind you of the seven-day window. Nothing is sent until a person approves. Funding from pounds uses Swap, with the rate and fee shown before you confirm.
Questions people ask
Does the Nigerian pension law apply to a foreign company?
It applies to employers of covered staff in Nigeria. If your UK company is the employer of three or more people there, the Act's duties apply; with an employer of record, the EOR carries them.
What is the pension rate in Nigeria for employers?
At least 10% of monthly emoluments from the employer and at least 8% from the employee.
How soon must pension be remitted in Nigeria?
Not later than seven working days after the day the employee is paid.
Do I need group life insurance for Nigerian staff?
Yes. PenCom's notice says every employer must hold group life cover of at least three times each employee's annual total emolument.
Sources
- PenCom: Framework for Micro Pension Plan (coverage of the Pension Reform Act 2014) · accessed Oct 2026
- ThisDay: CPS, what you should know about employee's rights (20 Mar 2023) · accessed Oct 2026
- PenCom: Notice on Group Life Insurance under section 4(5) PRA 2014 · accessed Oct 2026
- Mondaq (Adeola Oyinlade & Co): Understanding personal income tax under the Nigeria Tax Act 2025 (5 Jan 2026) · 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.