LCCI urges govt to suspend pension contribution increase

The Lagos Chamber of Commerce and Industry (LCCI) has called on the Federal Government and the National Pension Commission (PenCom) to suspend the proposed three-percentage-point increase in the mandatory pension contributions.

While strengthening retirement security is a legitimate objective, LCCI said increasing payroll costs at a time when businesses are struggling with high financing costs, persistent inflation, exchange rate pressures, rising energy prices, and multiple taxes that are yet to be addressed by the Nigeria Tax Act 2025 will weaken enterprise sustainability and slow job creation.

According to the LCCI Director General, Dr. Chinyere Almona, FCA, Nigeria’s current mandatory pension contribution of 18% (10% employer, 8% employee) is already broadly aligned with the OECD average of 18.8%. Raising it to about 21% would place Nigeria above many comparator economies, including the United Kingdom (8%), the United States (12.4%), Kenya (12%, subject to earnings caps), and South Africa, where no equivalent mandatory private-sector pension contribution exists.

The proposed increase will raise the cost of employment, discourage recruitment and wage growth, disproportionately burden MSMEs, reduce Nigeria’s competitiveness for investment, and increase the risk of non-compliance and business informality. A stronger pension system cannot be built on weaker businesses.

The LCCI therefore calls on the Government to defer the proposal until a credible Nigeria-specific actuarial and economic impact assessment is completed, and meaningful consultations are held with the organized private sector and labour. The priority should be restoring business confidence, protecting jobs, and expanding the formal economy, the only sustainable foundation for stronger pension outcomes.

In the meantime, we call on the National Pension Commission to explore more innovative investment instruments that deliver more returns to the current pension asset contributors. This is an alternative path to achieving the same objective for the proposed increase, which is more returns to contributors.