Pension & PenCom — Regulatory Reference¶
Last reviewed: 2026-04-01
Overview¶
The Contributory Pension Scheme (CPS) is mandatory for all employees in organisations with 3+ employees. It is regulated by the National Pension Commission (PenCom) under the Pension Reform Act 2014.
Key Facts¶
| Item | Detail |
|---|---|
| Employee contribution | 8% of BHT (Basic + Housing + Transport) |
| Employer contribution | 10% of BHT (minimum) |
| Total | 18% of BHT |
| Due date | 7 working days after salary payment |
| Authority | PenCom (regulation); PFA (fund administration) |
| Payment platform | PenPay (penpay.com.ng) or direct to PFA |
BHT (Basic + Housing + Transport)¶
Pension contributions are calculated on the employee's BHT components, not total gross salary. In practice, many Nigerian businesses structure salary as: - Basic: 40–60% of gross - Housing: 10–20% of gross - Transport: 10–20% of gross - Other allowances: Remaining (not subject to pension)
However, Finora calculates pension on the full gross amount as BHT unless the employee record specifies otherwise.
Pension Fund Administrators (PFAs)¶
- Each employee has a Retirement Savings Account (RSA) with a PFA of their choice
- The employer remits both employee and employer contributions to the PFA
- PenCom maintains a list of licensed PFAs
- Common PFAs: ARM Pension, Stanbic IBTC Pension, Leadway Pensure, FCMB Pensions
PenCom Codes¶
PenCom assigns codes to employers and PFAs. These codes are needed for remittance schedules. Finora's Pension Schedule export includes the PenCom employer code if configured.
Penalties¶
| Offence | Penalty |
|---|---|
| Failure to remit within 7 working days | 2% of total contribution per month |
| Failure to deduct or remit | Criminal prosecution under PRA 2014 |
PAYE Interaction¶
Pension contributions are deducted BEFORE calculating PAYE. This means: 1. Calculate employee pension (8% of BHT) 2. Deduct pension from gross income (along with CRA, NHF, NHIS) 3. Apply PAYE tax bands to the remaining taxable income
Higher pension contributions → lower taxable income → lower PAYE.
Where This Appears in Finora¶
- PAYE Returns → Employees tab — pension fields per employee
- PAYE Returns → Payroll Runs tab — Pension column in payroll table
- PAYE Returns → Schedules tab — Pension Schedule (Employee 8% + Employer 10% = 18% BHT) with Export CSV (PenPay) and link to penpay.com.ng