KEY POINTS

• Informal sector pension gap leaves millions unprotected.
• PenCom introduces agents to close pension gap.
• Informal sector pension gap threatens retirement security.

More than 75 million Nigerians working outside the formal economy risk reaching retirement without pensions or savings, raising the prospect of widespread old-age poverty and economic insecurity, according to the National Pension Commission.

The warning came on Monday in Abuja as PenCom unveiled its first licensed pension agent under a new framework designed to tackle the informal sector pension gap, a long-standing weakness in Nigeria’s retirement system.

Speaking at the presentation of a certificate to Awabah, PenCom Director-General Omolola Oloworaran said the scale of exclusion posed a serious social and economic threat if left unaddressed.

Informal sector pension gap threatens economic stability

Oloworaran cited National Bureau of Statistics data showing that more than 90 percent of Nigeria’s workforce operates in the informal economy, yet pension coverage within the segment stands at about 0.25 percent.

“In practical terms, this is almost zero,” she said. “Millions of traders, artisans, farmers, transport operators and small business owners retire with no pensions, no savings and no social protection.”

She warned that the informal sector pension gap undermines national resilience, noting that households without retirement protection are more vulnerable to shocks and dependent on extended family support.

According to her, Nigeria’s pension reforms since 2004 have delivered measurable gains but largely benefited salaried workers. Pension assets have grown beyond ₦27 trillion, supported by more than 10 million retirement savings accounts, placing Nigeria among Africa’s largest pension markets.

“But Nigeria is not a formal economy,” Oloworaran said. “Closing this gap is the next frontier.”

Informal sector pension gap drives reform push

PenCom is now prioritising the informal sector through regulatory changes, including accredited pension agents and the rebranding of the micro-pension scheme as the Personal Pension Plan. The aim is to simplify enrollment and allow flexible, small contributions suited to informal incomes.

Technology, Oloworaran said, would play a central role. Digital platforms will enable users to make real-time contributions and access their accounts, while partnerships with fintech firms, payment service banks, and telecommunications companies will expand the system’s reach. Pension contributions remain tax-deductible. She also described Awabah’s licensing as a milestone, saying agent-led distribution could deepen grassroots participation and generate thousands of jobs nationwide.

Awabah Chief Executive Officer Tunji Andrews further said the firm was created to address the lack of financial protection among informal workers powering the economy. He said Awabah’s pension offering combines retirement savings with insurance benefits, allowing monthly contributions from as little as ₦3,000.

Despite progress since 2004, analysts say failure to close the informal sector pension gap could leave millions exposed in retirement, with broader consequences for consumption, health outcomes and long-term economic stability.