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The short answer
Under PenCom's rules, employers with three or more employees contribute at least 18% of monthly emoluments, 10% from the employer and 8% from the employee, remitted to each employee's pension fund administrator within seven working days of paying salaries. Late remittance attracts a penalty of at least 2% of the unpaid contributions. An SA company usually remits through its Nigerian subsidiary or an employer of record, which holds the Nigerian employer registration.
Nigeria's contributory pension scheme applies to staff working in Nigeria, whoever ultimately owns the business. For an SA company with a Lagos team, the question is less whether pension applies than who remits it and how. This guide sets out the rules from PenCom's own FAQ and the practical routes.
The rules
| Rule | What PenCom says | Where |
|---|---|---|
| Who is covered | Private organisations with three or more employees | PenCom FAQ 2023, Part 1 Q12 |
| Minimum contribution | 18% of monthly emoluments: 10% employer, 8% employee | Part 2 Q15 |
| Deadline | Not later than 7 working days from the date salaries are paid | Part 2 Q14 |
| Late remittance | Overdue amount plus a penalty of at least 2% of the total unpaid contributions | Part 2 Q18 |
PwC's summary (reviewed May 2026) adds that the rate is 20% where the employer bears the whole contribution, that employee contributions are deductible for income tax, and that employers must maintain group life insurance of at least three times each employee's annual emoluments. PwC's page describes the scheme as mandatory for employers with 15 or more employees; PenCom's FAQ says three. Follow the regulator's figure and confirm with your PFA.
Each employee chooses the PFA
Contributions go into each employee's own Retirement Savings Account (RSA) with a pension fund administrator the employee chooses (Pension Reform Act 2014 s.11(1), as reported). A PenCom circular of 2020 says employers must not influence that choice. So a Lagos team of five may have five different PFAs, and your payroll must remit to each.
A labelled example
Example only. A Lagos analyst's monthly emoluments are ₦600,000. Confirm with the PFA which pay elements count as emoluments.
- Employer contribution, 10%: ₦60,000
- Employee contribution, 8%, deducted from pay: ₦48,000
- Total remitted to the RSA: ₦108,000
- If salaries are paid on Friday 30 October, the deadline is seven working days later. Count working days only, and allow for public holidays.
If the employer pays the whole contribution instead, the minimum becomes 20%: ₦120,000 a month in this example.
How an SA company gets it remitted
- Through a Nigerian subsidiary. The subsidiary is the employer. It registers with PenCom through the PFAs, deducts the employee share, adds its own and remits each month.
- Through an employer of record. The EOR's Nigerian entity is the employer and remits; ask it for monthly remittance schedules as evidence. See employer of record or Nigerian entity.
- Directly from South Africa, with no Nigerian entity. We found no PenCom guidance on a foreign employer with no Nigerian presence remitting for local staff. Ask a PFA what registration it would require before you rely on this route.
Whichever route you use, contributions are paid in naira into Nigerian accounts. If salaries are set in another currency, the naira amount at the date of payment drives the contribution; see paying Nigerian staff in dollars or naira.
What employees can do with their RSA
Staff own their RSAs, not the employer. Under section 13 of the Pension Reform Act 2014, as reported in July 2025, an RSA holder may transfer to another PFA not more than once a year, subject to PenCom guidelines, and a June 2025 PenCom circular bars PFAs that induce transfers from receiving them in the transfer window. For an employer, that means your payroll's PFA list will change over time; build a step into onboarding and each payroll cycle to confirm each employee's current PFA and RSA PIN.
Extras beyond the minimum
The 18% is a floor. An employer may agree additional retirement benefits, such as gratuity or long-service awards; a BusinessDay analysis of section 4(4)(a) of the 2014 Act describes these as optional, not mandatory. If you offer them, put the terms in writing, decide whether they are funded through the RSA as voluntary contributions or held separately, and budget for them in rand from the start, because they will be paid in naira.
Common mistakes
- Remitting a single total without a per-employee schedule, so contributions cannot be credited to the right RSAs.
- Calculating on basic pay only when the PFA treats other pay elements as emoluments.
- Paying salaries on time but pension a month late, which triggers the penalty.
- Forgetting group life cover for new starters.
What to check each month
- Remittance schedule per PFA matches payroll (names, RSA PINs, amounts).
- Remitted within seven working days of the salary date.
- New starters have RSA PINs before their first payroll; if not, the PFA's onboarding comes first.
- Group life cover is in force and covers new starters.
- Payslips show the employee's 8% deduction.
For the Nigerian rates in more depth, see pension contributions in Nigeria: employer and employee rates. If South African staff are also involved, SA retirement annuity vs Nigerian RSA compares the two systems for individuals.
Where Pryme fits
A Nigerian subsidiary with a Pryme Business Account can run naira payroll and bulk payouts to PFA collection accounts, and the Compliance agent can flag remittances approaching the seven-day deadline for a person to approve. Outside Nigeria, Pryme's activities are carried out through regulated partners.
Questions people ask
What is the pension contribution rate in Nigeria?
PenCom's FAQ sets a minimum of 18% of monthly emoluments: 10% employer, 8% employee. PwC says 20% where the employer pays it all.
When must Nigerian pension contributions be remitted?
Not later than seven working days from the date salaries are paid.
What is the penalty for late pension remittance in Nigeria?
The overdue amount plus a penalty of at least 2% of the total unpaid contributions, per PenCom's FAQ.
Can my SA company remit pension without a Nigerian entity?
We found no PenCom guidance on that. Most SA companies remit through a Nigerian subsidiary or an employer of record.
Sources
- PenCom, Frequently asked questions 2023 · accessed Oct 2026
- PwC Worldwide Tax Summaries, Nigeria: Other taxes (individual, reviewed 29 May 2026) · accessed Oct 2026
- BusinessDay, PRA 2014 and management of private sector gratuity and pension schemes (14 December 2015) · accessed Oct 2026
- AllAfrica, PenCom on RSA transfer and employee choice of PFA (22 July 2025) · 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.