Paying Nigerian pension contributions to each PFA
How Nigerian pension contributions split between employer and employee, why each employee's PFA gets its own payment, and how to record it in Achekam.
By Achekam · · 4 min read · For Running a business businesses in Nigeria
Pension is the payroll line where small Nigerian employers most often discover they have been doing something slightly wrong for a long time. The deduction is on the payslip, the employer's share is in the budget, and the total leaves the bank every month. But the money has to reach each employee's own retirement savings account, held by the pension fund administrator that employee chose, and a single lump sum to one administrator does not do that.
This article covers the split between employer and employee at the time of writing, the case where the employer pays the lot, why the payment has to be divided by administrator, and how Achekam prepares, posts and records it.
The employer's share and the employee's share
Nigerian pension contributions are at least 18% of pensionable pay: 10% from the employer and 8% from the employee. The employee's 8% is deducted from pay; the employer's 10% is an additional cost to the business.
A worked example in words. An employee's pensionable pay for the month is the figure your adviser has agreed counts as pensionable. The payslip shows 8% of it deducted for pension. The employer adds 10% of the same figure. Together, 18% of pensionable pay goes to the employee's administrator for that month.
Those rates are minimums. An employer may agree to contribute more, and a proposal in July 2026 to raise the employer's minimum was only a proposal; check whether anything has changed before each new tax year.
When the employer bears the whole contribution
Some employers choose to carry the whole pension contribution, so nothing is deducted from the employee's pay. In that case the total contribution is 20% of pensionable pay, all paid by the employer. That is more than the 18% split, so price it in before you promise it in an offer letter. Put the arrangement in writing in each employment contract, so that a later payroll officer does not start deducting 8% from staff who were promised the employer would carry it.
First, does pension apply to you?
Before any of this, a Nigerian employer needs to know whether the contributory scheme applies to it at all. To confirm Achekam's 2026 Nigerian payroll table, the business must choose the pension coverage threshold, 15 or 3 employees, with a reason, and a pay run refuses until the employer has stated whether pension applies. The considerations behind that choice are set out in the Nigerian pension coverage decision.
One schedule per pension fund administrator
Each employee chooses their own pension fund administrator, or PFA. In a business of eight people, it is entirely possible to have five different PFAs. Each PFA needs to receive the contributions for its own members, identified so that it can credit each person's account.
Achekam prepares Nigeria's monthly pension schedules from approved pay runs, split per pension fund administrator, alongside the PAYE schedules per State and the NHF and NSITF schedules. The split per PFA is the point: one schedule for each administrator, listing its members and their employee and employer contributions, and the total to pay it.
Recording each employee's PFA
The split only works if each employee's record says which PFA holds their account. Collect it on the first day of employment, along with whatever identifier the PFA uses for the employee's retirement savings account, and check it against the employee's own PFA documents rather than relying on memory. A contribution sent to the wrong administrator is a contribution the right one never received, and untangling it takes time and paperwork.
When an employee moves to a different PFA, update the record from the month the move takes effect, and keep the evidence of the change on file.
Liabilities in the wages journal
When a pay run is approved, Achekam posts it to your ledger as a wages journal, with the amounts owed to the tax authority and the funds as liabilities. The pension owed, both the employees' deductions and the employer's share, sits as a liability until it is paid. The employer's share is also recorded as a cost.
Watch that liability. If it keeps growing, contributions are being deducted and not paid over, which is money that belongs to employees.
Paying, with a second person confirming
Achekam does not file or pay Nigerian payroll returns. A person pays each PFA through its own channel and records the filing or payment with the reference it gave. A second person confirms each payment against the PFA's schedule.
That evidence matters beyond the monthly routine. PenCom's requirements for a pension clearance certificate list what an employer must show to get one: the minimum 10% employer and 8% employee contribution rates, three years of remittance evidence, settled arrears and group life insurance for staff. A business that keeps each month's receipts against each PFA's schedule has the remittance evidence ready when a tender or contract asks for that certificate.
A monthly pension routine
- Confirm every employee's PFA is recorded and current.
- Approve the pay run (someone other than the preparer).
- Download the pension schedule for each PFA.
- Pay each PFA its total, quoting what it needs to identify your business and each employee.
- Record each payment with the reference the PFA gave.
- Have a second person confirm each payment against its schedule.
- Check that the pension liability in the ledger is cleared.
Pension is one of several employer obligations that arrive with the first hire; the employer-only costs are covered in NSITF and ITF: what Nigerian employers pay.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
