Nigeria’s National Pension Commission (PenCom) has taken a significant step towards modernising the country’s pension system with the launch of the Pension Contribution Remittance System (PCRS).1 This new platform replaces the manual process of remitting pension contributions and allows employers to upload their employees’ pension schedules and make payments electronically.
WHY THIS MATTERS
The PCRS aims to eliminate paperwork, reduce errors, increase transparency in pension remittances, and resolve long-standing issues related to uncredited pension contributions and verification delays. To achieve this, the PenCom has approved nine (9) Payment Solutions Service Providers (PSSPs) to facilitate pension payments for employers. These PSSPs will validate employees’ personal identification numbers (PINS) and Pension Fund Administrators (PFAs) with PenCom’s database before processing payments.
Key Features of the New System
- Automated Remittance: Employers will remit pension contributions through approved PSSPs.
- Validation Process: PSSPs will validate employees' PINs and PFAs in PenCom's database before processing payments.
- Error Prevention: The system has protocols to prevent errors in uploaded remittance schedules.
- Convenient Access: Employers can choose from multiple approved PSSPs for remittance.
- Instant Online Payment: The PSSPs' remittance platforms support various payment methods for online payments.
Step-by-Step Guide for Employers
- Select an approved PSSP;
- Register and create an employer profile on the selected platform;
- Prepare and upload employee remittance schedule on the platform;
- Validate employees' PINs and PFAs;
- Make payment and confirm remittance for records purposes.
Implementation and Mandatory Compliance
The new system became operational on 1 April 2025, and employers are required to transition to this new remittance process by 1 June 2025. After this deadline, all pension contributions must be made exclusively through the approved PSSPs.
Non-compliance with the directive will prevent the remittance of pension contributions and the submission of employees' pension schedules.
KPMG INSIGHTS
The PCRS is an important upgrade to Nigeria's pension system. By requiring simultaneous electronic submission of payments and schedules, the PCRS aims to foster a synchronised information flow that is expected to eliminate discrepancies, which have challenged the system up to now. Its validation mechanisms should help support accurate allocation of contributions by verifying employee PINs and employer codes. PenCom is aiming for a better user experience, with the PCRS designed to be convenient and easy to navigate.
Although this digitalisation effort is a welcome step towards modernising the system, it is not without potential challenges. Employers and PFAs may face difficulties adapting to the new platform or experience technical issues during the initial integration phase. Some of these potential issues are highlighted below:
- Technical Glitches: While some PFAs have proactively initiated training programmes to familiarise stakeholders with the PSSP platforms, unforeseen technical issues may only become apparent once the system is fully operational. This underscores the need for robust technical support and responsive problem-solving mechanisms during the initial rollout. Reliable technical support will be crucial in addressing temporary disruptions to remittance processing, which could be due to system down-time or maintenance periods.
- Data Entry Accuracy: Accurate data entry is critical for seamless processing, highlighting the importance of attention to detail while using this new system. Therefore, employers may need to designate personnel with proper skills and a willingness to undergo training to become proficient in the new processes. This will help enable accurate data validation and navigation of the platform and help reduce errors such as incorrect PINs, mismatched payment or employer codes, and rejected remittance submissions.
- Clear Timeline for PFAs: It is important to set a clear timeline for PFAs to process remittances after receiving the relevant documentation (payments and schedules). Without a well-defined timeframe, prolonged processing timelines may undermine the anticipated efficiency gains from the reforms. Therefore, establishing and communicating a reasonable timeline should foster accountability and provide a performance benchmark for PFAs, which will help the new system to operate as intended.
- Phased Implementation: Given the potential complexities involved, a phased implementation approach might be more feasible for onboarding many employers instead of requiring all employers to comply by 1 June 2025.
The PCRS has the potential to enhance pension administration. Proactively addressing any implementation challenges that may arise is crucial for its successful implementation and long-term sustainability.
Employers with questions about the new policies and procedures and in need of guidance on next steps should consult with their compensation and benefits professionals or a member of the KPMG compensation and benefits team with KPMG in Nigeria (see the Contacts section).
FOOTNOTE:
1 National Pension Commission (www.pencom.gov.ng), “The Pension Contribution Remittance.”
RELATED RESOURCE:
This article is excerpted, with permission, from “National Pension Commission Introduces New Pension Contribution Remittance System,” (April 2025), a publication of the KPMG International member firm in Nigeria.
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