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.

The National Insurance Commission (NAICOM) and the Federal Road Safety Corps (FRSC) on Wednesday in Abuja, inaugurated a Joint Committee on the Enforcement of Compulsory Third-Party Motor Insurance.
Speaking at the event, the Commissioner for Insurance, Mr. Olusegun Omosehin, commended the FRSC for its leadership and partnership in driving this initiative.
He noted that the collaboration would deliver concrete benefits to Nigerians through:
• Effective enforcement of compulsory Third-Party Motor Insurance;
• Integration of insurance and vehicle registration databases;
• Enhanced protection and compensation for road accident victims; and
• Increased public education on insurance obligations and consumer rights.
Omosehin emphasised that the initiative aligns with President Bola Tinubu’s Renewed Hope Agenda, aimed at reforming key sectors for inclusive national development.
In his remarks, the Corps Marshal of the FRSC, Shehu Mohammed, noted that the partnership would significantly improve enforcement of compulsory motor insurance nationwide and enhance the welfare of road users.
The Corps Marshal reaffirmed FRSC’s readiness to support this initiative through technology integration, data sharing, and field enforcement.
He described the partnership as a model of inter-agency synergy that would not only reduce road accidents, but also enhance the government’s capacity to provide prompt financial and medical support to victims.
He further stressed that collaboration among public institutions is crucial for achieving national development goals and assured that FRSC remains fully committed to ensuring the sustainability of this initiative.
In presenting the Joint Committee’s Terms of Reference, the Deputy Commissioner for Insurance, Mr. Ekerete Gam-Ikon, highlighted the committee’s primary responsibilities, among which are:
1. Enforce compulsory Third-Party Motor Insurance nationwide.
2. Reduce the number of uninsured vehicles in Nigeria.
3. Ensure prompt compensation and medical support for accident victims.
4. Promote awareness of the benefits and obligations of insurance.
5. Enable real-time verification of insurance status through digital integration.
6. Support microinsurance development for commercial drivers and passengers.
7. Strengthen emergency response coordination during the “golden hour.”

Co-chaired by senior officials from both agencies, with NAICOM serving as the secretariat, the committee will coordinate joint field operations, public sensitisation campaigns, and continuous policy evaluation to improve compliance and consumer confidence.
In his closing remarks, the Commissioner for Insurance reiterated NAICOM’s commitment to sustained collaboration, stating:
“This partnership is not a one-off event. We are open to continuous feedback, regular evaluation, and the integration of new ideas as we move forward. Fewer road accidents, more insured motorists, and stronger public confidence in insurance will be among the key outcomes.”
The inauguration concluded with a joint declaration by the Commissioner for Insurance and the Corps Marshal, formally launching the NAICOM-FRSC Joint Committee, accompanied by a commemorative group photograph with senior executives and committee members.

The trio of National Insurance Commission (NAICOM), Federal Road Safety Corps (FRSC) and National Health Insurance Authority (NHIA) have agreed to strengthen their efforts in improving safety and emergency response on Nigerian roads through the Motor Third Party Insurance Scheme.
This development followed a courtesy visit by the FRSC Corps Marshall, Shehu Muhammed to the Commissioner for Insurance, Mr. Olusegun Omosehin on Thursday in Abuja.

During the meeting, the Corps Marshal congratulated NAICOM on the signing of the Nigerian Insurance Industry Reform Act (NIIRA) 2025 and acknowledged the Commission’s efforts in driving reforms in the industry.
He emphasised the need for enhanced data exchange between NAICOM and FRSC to develop a robust system for quick response to road accidents and compensation.
The Corps Marshal also stressed the importance of digitising the process for prompt emergency response and eliminating fake motor insurance policies.

Responding, the Commissioner for Insurance thanked the Corps Marshal for the visit and commended his efforts in upgrading the licensing system.
He also highlighted that NIIRA 2025 has strengthened the compulsory third-party motor insurance policy and established a fund for compensating road accident victims, which will be administered by a committee that includes FRSC representation.

The representative of the National Health Insurance Authority (NHIA), Mr. Ajodi Nuhu Nasir expressed satisfaction at the collaborative efforts among the agencies, noting that this synergy will culminate in a robust system that not only safeguards our roads, but also ensures prompt and quality medical treatment for accident victims, thereby reducing the morbidity and mortality associated with road crashes.

The meeting culminated in the following agreements:

1. Data Sharing Integration: NAICOM and FRSC will integrate their data sharing systems to enable seamless information sharing.
2. Joint Awareness Campaign: The agencies will develop a joint awareness campaign strategy to educate the public on insurance benefits and road safety.
3. Enforcement Committee: A joint committee will be established to collaborate on enforcement of proper insurance coverage and address cases of fake insurance policies.
4. Inclusion of Insurance Requirements: FRSC will include insurance requirements, especially for valid third-party motor insurance, in its awareness and enforcement efforts.

The collaboration aims to promote road safety, ensure prompt treatment for accident victims, and protect the interests of motorists and other road users. A date will be announced for the inauguration of the joint committee.