Pension schemes are a cornerstone of financial security for millions of Nigerian workers, offering reassurance for a comfortable retirement after years of service. But what happens when a pension contributor dies before or after retirement? For many families, the uncertainty surrounding the fate of pension benefits can be both distressing and confusing. This article explores the laws, procedures, and common practices regarding the payment and administration of pension benefits upon the death of a contributor under the Nigerian pension system.

Nigeria operates the Contributory Pension Scheme (CPS), introduced by the Pension Reform Act (PRA) of 2004 and further amended in 2014. The scheme is mandatory for employees in the public service and private organizations with at least three staff members. Under the CPS, both employer and employee contribute to a Retirement Savings Account (RSA) managed by Pension Fund Administrators (PFAs), regulated by the National Pension Commission (PenCom).
What Happens When a Contributor Dies?
The unfortunate event of a contributor’s death does not mean the end of their hard-earned pension savings. It is also important to clarify that beneficiaries are legally entitled to receive pension benefits and differ from the Next of Kin(s) indicated on the RSA details of the deceased. While the Next of Kin serves as a point of contact or representative for administrative purposes, only designated beneficiaries (as stipulated by official nomination forms or by law) are eligible to claim and receive funds from the RSA. Families should not assume that the Next Kin automatically inherits pension benefits, underscoring the need to carefully complete beneficiary nominations and keep them current. The fate of the pension benefit depends on the timing of the contributor’s death whether it occurs before or after retirement and the status of their RSA.

Death Before Retirement
If a contributor dies before retiring or before accessing their RSA, the total amount in the contributor’s RSA, including accrued investment incomes, becomes available to their legal beneficiaries. The PRA 2014 and PenCom guidelines govern the process for the identification of beneficiaries and disbursement of benefits.

Nomination of Beneficiaries
Upon opening an RSA, contributors are required to nominate next of kin and beneficiaries, usually through forms provided by the PFA. This nomination is critical because it determines who will be eligible to claim the benefits in the event of the contributor’s death.

Application and Documentation
Upon the contributor’s death, the nominated beneficiaries or next of kin must formally apply to the deceased’s PFA for the release of the pension funds. The required documents typically include:
Death certificate of the contributor
Letter of Administration (if there is no valid Will)
Valid means of identification for the beneficiaries
Bank account details for payment
Birth certificate of the deceased (in some cases)
Proof of relationship to the deceased (such as a marriage certificate or affidavit)
The PFA then verifies the documents and initiates the process of transferring the funds to the legitimate beneficiaries.

Dispute Resolution
Disputes can arise, especially where multiple claimants present themselves or where the deceased did not clearly nominate beneficiaries. In such cases, the PFA may require a Letter of Administration from a probate court, which officially recognizes the legal beneficiaries of the estate.

Death After Retirement
If a contributor dies after retirement while already receiving pension payments, the treatment of their pension benefits depends largely on the mode of benefit payment that was chosen at retirement.

Programmed Withdrawal
Many retirees opt for “programmed withdrawal,” where pension payments are made monthly until the RSA is depleted or until the retiree passes away. If the retiree dies before exhausting the RSA, the balance is paid to the beneficiaries.

Annuity
Alternatively, a retiree may choose a “retirement annuity,” whereby an insurance company pays them a guaranteed income for life. If the retiree chose an annuity with a guaranteed period, and they die within that period, the benefits may also pass to beneficiaries or the estate for the remainder of the guaranteed term.

Estate Laws and Probate Process
Where there is no clear nomination of beneficiaries or disputes arise, the payment of pension benefits may be subject to the general laws on inheritance and probate in Nigeria. The Letter of Administration or Will becomes critical here, as PFAs will only release funds to beneficiaries recognized by law.

Taxation and Deductions
Pension benefits are generally tax-exempt in Nigeria; thus, the funds transferred to beneficiaries are not subject to income tax. However, any debts or loans owed by the deceased contributor to their employer may be deducted from the RSA before disbursement to the beneficiaries.

Role of Pension Fund Administrators (PFAs) and PenCom
PFAs play a central role in managing RSAs and ensuring that contributors’ wishes regarding their pension benefits are followed after death. PenCom provides regulatory oversight, issues guidelines, and can be petitioned in cases of disputes or delays.

Common Challenges and Practical Steps for Families
Families often face hurdles in accessing pension benefits, ranging from bureaucratic delays to legal disputes among potential beneficiaries. To minimize challenges, contributors are encouraged to:
Ensure their beneficiary nominations are up to date and accurately reflect their wishes
Inform their family members of their chosen PFA and pension arrangements
Keep relevant documents (e.g., RSA statements, beneficiary forms) in an accessible place
Beneficiaries should be prepared with all required documents and promptly engage with the deceased’s PFA to avoid unnecessary delays. The death of a pension contributor can be an emotionally and financially trying time for families. However, Nigeria’s pension regulations are structured to ensure that contributors’ savings are not lost but are transferred to their loved ones according to the law. Staying informed and following the correct procedures are the keys to smooth and timely access to these benefits.

Parthian Pensions Limited said it would be focusing on the micro pension market to gain fresh Retirement Savings Account (RSA) holders into its customer base.

The newly approved Pension Fund Administrator (PFA) also advocated increase in financial literacy to enhance and deepen adoption of pension scheme in the country.

Speaking at the 10th National Conference of Nigerian Association of Insurance and Pension Editors (NAIPE) in Lagos recently, the Head of Operations, Parthian Pensions Limited, Mr. Adetunbi Ashaye called on stakeholders in Nigeria’s pension sector to educate Nigerians on the importance of subscribing to the Contributory Pension Scheme (CPS).

While highlighting some of the developments in the industry that demonstrate its potential for growth, he said, people that are clamouring to exit the scheme have forgotten that it was because of the past bad experiences that the new scheme came on board.

“This is because the previous pension system was unfunded. Now that it is funded through the contributions of the employees and the employers, it is highly regulated.

“What really needs to happen is the need to drive financial literacy because people in Nigeria see pension as insignificant, something that is not important,” he advised.

“The impact of the scheme to the economy is ensuring that people have good retirement; people have good life after they have stopped working. In other words, what we need to do in the industry as operators is to ensure financial literacy. We need to let people know what is going on and why they should continually support the contributory pension scheme,” he added.

While pointing out that most Nigerians see insurance and pensions as unnecessary, he noted that, “their concern is that, if they cannot provide for their immediate needs, which is food, shelter and clothing, why should they save? And it still boils down to a Micro Pension Plan.

“What should be happening in the industry now is to simplify, digitise micro pension plans, and ensure diversification in different ways so that we can reach out to everybody.”

With pension assets projected to reach N29 trillion at the end of the year, he said, “the pension industry performance in the first quarter, 2025 shows N79 billion was paid for Programme Withdrawal and N54 billion for Annuity.

“There is also the certification of asset classifications, and what we need is transparency, which is what PenCom is doing, people are looking and seeing how the funds are growing.”

Meanwhile, he said, his PFA will leverage on the opportunities provided by micro pension plan to enrich its customer base and bring more people who are not currently covered under the regular scheme into the pension safety net.

“Though, we are one of the late entrants into the industry, that doesn’t mean that we don’t have what it takes to excel.

“So, we are technology driven as we leverage technology for effective service delivery to our contributors. This is effective and it’s going to drive people and companies towards us.

“In another instance, we are going to flood micro pension space which still remains untapped. About 70 to 80 million people are in that space.

“So, we are not just coming into the business, to cannibalise RSA holders, we are coming to bring on board new RSAs and chart a new course,” he assured.

Saying its prospective contributors should expect simplicity, and less complexity in onboarding, he added that, “they can onboard from the comfort of their homes. We care about you (our customers) and we will always check on you. There is human face to every service we render. We will drive towards financial literacy. We are the pensions managers of choice, trust and we will get that actualised.”

By Sola Alabadan

The National Insurance Commission (NAICOM) has called for the backing of the National Assembly to ensure that Nigerians comply with the provisions of the Nigerian Insurance Industry Reform Act 2025.

The Commissioner for Insurance and Chief Executive of NAICOM, Olusegun Omosehin made this call during the stakeholders retreat convened by the House of Representatives Committee on Insurance and Actuarial Matters, in collaboration with the NAICOM in Maiduguri, Borno State.

He said “Without your backing, compliance will remain weak, and the promise of this law may not be realised. Let us seize this moment to build a future where insurance is not just a policy document, but a promise of security, resilience, and shared prosperity. Let us align our efforts—legislative, regulatory, and operational—to ensure that NIIRA 2025 delivers on its transformative potential.”

The insurance sector stands ready to partner with your government in deepening risk protection for public assets and supporting agricultural resilience.

Insurance-Agriculture Cooperation: A Strategic Imperative
Agriculture remains the backbone of Nigeria’s rural economy and a vital pillar of food security. Yet, it is also one of the most vulnerable sectors—exposed to climate shocks, pest outbreaks, and market volatility. Insurance offers a powerful tool to de-risk agriculture and empower our farmers.
Recent impact statistics show:
Over 1.47 million smallholder farmers have been covered under NIRSAL’s agricultural insurance schemes, with a target of 3.6 million by 2026.
In Q2 2025, 250,000 farmers were insured across eight states under federal initiatives.
Statistics has it that in North Central Nigeria, insured rice farmers recorded 11% higher productivity than their uninsured peers—averaging 20 bags/hectare compared to 18 bags/hectare.
Successful programs include:
Kaduna ginger farmers received payouts under the NAGS-AP scheme after suffering over 90% crop loss.
Livestock and encroachment insurance in Sokoto, Bauchi, Adamawa, and Plateau States are reducing farmer-herder conflicts.
Under NIIRA 2025, NAICOM aims to:
Expand index-based and parametric insurance for crops and livestock
Promote bundled insurance products with inputs and credits
Create a platform of collaboration for operators to partner with tech firms and agribusinesses to scale digital insurance delivery
Work with state governments to embed insurance into agricultural extension services
The theme of this retreat, “Navigating the New Era of Insurance Regulation: Understanding NIIRA 2025”, reflects our collective commitment to building a modern, inclusive, and resilient insurance ecosystem. NIIRA 2025 consolidates decades of fragmented legislation into a coherent framework that empowers regulators, protects consumers, and fosters innovation.

NIIRA 2025 is not just about regulation; it is about reimagining the role of insurance in our economy. The new legislation sets out to:
Modernise our frameworks in line with international standards.
Safeguards consumers via stronger disclosure, claim handling, and a Consumer Protection Fund.
Promote ethical conduct, transparency, and sound market practices through stronger governance and oversight.
Strengthened compulsory insurance to protect lives and property.
Broaden financial inclusion with microinsurance and Takaful.
Strengthened the financial health of insurance companies.
Push digitalisation for greater access, transparency, and trust.

In summary, this Act is a chance to shift insurance from being a niche service to being a pillar of Nigeria’s economic stability.

Breaking Down the Key Areas
1. Compulsory Insurance Enforcement

The gaps in compliance with the compulsory classes, such as Motor Third Party, Builders’ Liability, Group Life, Health, represents inadequate protection of citizenry and loss of revenue. NIIRA 2025 significantly strengthens the enforcement framework for Nigeria’s compulsory insurance categories. The Act introduces robust enforcement provisions, including clearer penalties for non-compliance and mechanisms for verification.
A key addition is the mandatory insurance coverage for government assets and employees, ensuring better protection of public resources and aiming to increase premium volume while setting a compliance framework. Legislative support is nevertheless essential in ensuring compliance by States and Agencies.

2. Agriculture and Climate Risk

Nigeria loses billions annually to floods, drought, and other climate shocks. Yet only a few of our farmers have insurance. With your support in budget appropriations and subsidies, we can de-risk agriculture sector, protect livelihoods, and strengthen food security. Disasters and accidents shouldn’t always drain public funds. With insurance, government can redirect resources to pressing priorities, hence insurance reduces fiscal burden.

3. Infrastructure and Public Assets

Every year, billions are spent on roads, housing, schools, and hospitals. Without insurance, one disaster can erase years of investment. With enforcement, government’s emergency expenditures can drop by up to 40%, freeing resources for other priorities like education and health. Insurance is a source of long-term capital. With stronger premiums, insurers can fund infrastructure bonds, housing, and industry.

4. Financial Soundness of Insurers

The Act introduces stricter capital and solvency rules which is geared towards strengthening insurers, mobilising funds/investments in infrastructure and industrial growth, and increasing insurance penetration in Nigeria.

5. Digitalisation and Consumer Protection

Trust has been a challenge in our market. Delayed claims discourage participation. By mandating digital processes, the Act introduces transparency and efficiency. Digital distribution is a framework for mobile and digital solutions to eliminate geographical barriers and reduce transaction costs. But to succeed, there is need for collaboration and alignments with laws on data protection and cybersecurity, and many others.

The Act also establishes a comprehensive consumer protection framework, prominently featuring Policyholder Protection Fund. This fund acts as a vital safety net, ensuring that valid claims are honoured even if an insurer faces insolvency, thereby protecting policyholders from financial loss.

6. We are also optimistic that the new legislation will bring millions of Nigerians into the financial safety net through its financial Inclusion provisions.
Microinsurance offers a Simplified, affordable products for low-income individuals with flexible payments and reduced documentation to increase accessibility.
Takaful is a Shariah-compliant alternatives based on mutual protection, expanding access for religiously sensitive populations.

Why Legislative Support Matters

Honourable legislators, the law has been passed, but now the real work has only just started. For this Reform Act to succeed, we request that your committee respectfully:
1. Exercise oversight to ensure MDAs comply with compulsory insurance.
2. Provide budgetary support.
3. Drive awareness and advocacy in your constituencies.
4. Facilitate harmonization of state policies with federal frameworks.