top of page
  • Writer's pictureDamilola Agubata

6 Types of Pension Plans All Employees Must Know

For how long have you been working? Three years? Five years? Ten? Fifteen?

How well do you know about the different types of pension plans we have in Nigeria?

Yes, you know about pensions and you’ve opened a pension account to start saving for your retirement. But you shouldn’t stop at this. It’s also important for you to know the different pension plans at your disposal.

Are you wondering why? Well, knowing these plans will help you manage the contributions in your current pension account effectively and assist in guiding you on how to improve the funds in your retirement savings account.

Currently, there are six types of pension plans in Nigeria and they cover everyone in the active workforce – from 9 to 5vers to self-employed business owners.

You’re in the right place if you’re interested in the perfect pension plan for you as an employee or entrepreneur.

Here are the six types of pension plans in Nigeria you must know as a worker or a business owner.

This is for all Nigerian employees living in Nigeria and abroad. Credit: Oak Pensions Limited
This pension article is for all Nigerian employees living in Nigeria and abroad. Credit: Oak Pensions Limited

1. Contributory Pensions Scheme (CPS)

Under the contributory scheme, all 9 to 5 workers in the private and public sectors must open a Retirement Savings Account (RSA).

The first thing to do under this pension scheme is to open a Retirement Savings Account (RSA). After opening this account, your employer contributes a fixed amount of money from your monthly salary to it.

You are also required to contribute a fixed amount to your retirement savings account (RSA) every month.

Usually, between 15% to 20% of your monthly salary is deposited into the account.

Although contributions are made automatically, your RSA is just like a savings account. You keep it for as long as you continue working even if you switch employers.

But there’s a difference between a normal savings account and a retirement savings account (RSA).

While the money you save in your savings account does not yield high interest, the contributions in your RSA are invested in financial instruments to generate profits, thereby protecting your pension fund from inflation.

Another important thing to note is that the money that goes into your RSA is not debited directly from your bank account every month.

If you work a regular 9 to 5, then you’ve possibly opened a retirement savings account (RSA).

2. Voluntary Contributory Scheme

As the name implies, all your contributions are voluntary. It is not compulsory for you to make voluntary contributions to your retirement savings account (RSA).

This pension plan allows you to contribute money at a flexible rate. This means you are not obligated to save every month. You can decide to save weekly, quarterly or biannually.

3. The Micro Pension Scheme

This pension plan is for self-employed business owners. If you are a small business owner, then you are covered under the micro pension plan.

This plan gives more freedom to entrepreneurs, traders, professionals, and other self-employed people who don't qualify for the contributory pension scheme.

4. Cross-Border Pension Scheme

This is for Nigerians living abroad. Nigerians who work outside of the country but still want to contribute to their pension fund can do so through the cross-border pension scheme. The money in your Retirement Savings Account will also be in Naira.

5. Retirement Plan

This plan is for retirees under the Contributory Pension Scheme (CPS). You are not a risk-taker as a retiree. As a result, your pension fund will be invested in low-risk financial instruments, primarily fixed-income securities such as corporate or government bonds.

6. Institutional Pension Fund Management

This system was made for businesses and other organizations. Basically, the product is only for state governments, MDAs, corporations, and other large organizations.

It's different from a normal contribution because it's made for businesses instead of individuals.

Oak Pensions partnered with Kie Kie to spread the message of pensions to everyone. Watch the video here.

Are you ready to open a retirement savings account (RSA) to start saving for your retirement? Contact Oak Pensions Limited via email: You can also call the Marketing Manager on 09087448661.

Recent Posts

See All


bottom of page